Questions and Replies

Reply:

I have been advised that:

The DSBD is the custodian of red tape reduction (RTR) as it relates to SMME and co-operatives. The Department has been working collaboratively with Salga, COGTA and the Presidency since the 2017/18 financial year to implement measures to address the legislative and administrative burden faced by SMMEs and co-operatives, more specifically at the municipal sphere of government. These interventions have been primarily aimed at awareness raising, capacity building and commissioning research that:

• Investigates sector and sub-sectors wherein the influence of red tape is unpacked, to develop strategies and interventions that circumvent the negative effects of red tape.

The Department commissioned a study on Regulatory impediments affecting SMME growth and development in South Africa: Findings and Action Plan to investigate the regulatory environment and related legislation and compliance for SMMEs in the 2023/24 financial year. The report identified 29 pieces of legislations that act as primary inhibitors of business start-up and growth. These pieces of legislation were identified as either having a direct impact on SMMEs, whilst the impact of others relate primarily to the administration of the regulation rather than the regulation itself.

Excessive red tape with regards to compliance with labour laws, human and industrial relations, tax and tax-related issues, legal requirements, municipal regulations, and support for business start-ups are key obstacles experienced by SMMEs.

What are the relevant details of the progress that has been made in (a) reducing the regulatory impediments for small, medium, and micro-enterprises and co-operatives?

Through the initial regulatory impediments affecting small businesses and co-operatives in South Africa research work, to improve rates of SMME establishment and performance, the department has undertaken extensive consultative measures to review and critique the initial work on government-wide restrictive regulations and to seek, through its intergovernmental relations and ease of doing business initiatives, resulting in a Regulatory Impediments Implementation Plan.

The making of a Regulatory Impediments Implementation Plan has been conducted in the 2023/24 financial year involving consultations conducted with key stakeholders on regulatory impediments to SMME growth and report produced in quarter 1 and 2, where stakeholders such BUSA, NEDLAC, Chamber of Businesses (South African Chamber of Commerce and Industry, The Afrikaanse Handelsinsituut, NAFCOC, National Small Business Chamber, BUSA, Black Business Council (BBC), Business Leadership South Africa (BLSA), Business unity South Africa (BUSA), Small Business Institute, NEDLAC) include full list) were consulted. Report on inputs and feedback from key stakeholders incorporated into a prioritised Regulatory Reform Implementation Plan in Quarter 3 and the department is finalising a Regulatory Reform Implementation Plan to be submitted to Minister in Quarter 4.

The making of the Regulatory Impediments Implementation Plan which is planned to be concluded in the end of this financial year (2023/24), is a result of the relatively extensive consultations conducted with key stakeholder SMME and Coops sectors which regarded compliance with regulatory requirements as one of the primary impediments to their growth than the actual regulations and legislation. Relative to these small businesses’ turnovers, the cost of compliance was also noted as onerous as they often do not have employees or the internal capacity to attend to these - and that it is expensive to outsource such functions.

(b) implementing remedies to address the 29 major regulatory barriers identified through research?

To address the regulatory impediments affecting SMMEs and Co-operatives through the 29 pieces of legislation across the three spheres of government to support SMME growth and development, the department is establishing a comprehensive legislative framework for small businesses and co-operatives. The department has also identified priority legislation and sectors to address regulatory impediments impacting SMMEs and Co-operatives in the new MTSF period, including Economic Reconstruction and Recovery Plan and other priority government interventions. This will be achieved through a revised Regulatory Reform Implementation Plan to be concluded at the end of 2023/24 financial year.

The DSBD’s Regulatory Impediments Implementation Plan is a strategic tool to assist it in carrying out ongoing legislative review and development of the regulatory framework falling within its purview, in a strategic and focused manner. The Implementation Plan is, however, a rolling plan and will be reviewed and revised periodically to ensure that it remains up to date, effective and continues to align to the DSBD’s broader strategic objectives, also considering emerging risks and developments.

The results of the Regulatory Impediments Implementation Plan were subject to rigorous planning, prioritisation, and internal and external consultation. The considerations and approach undertaken in developing the revised Regulatory Implementation Plan included the approach to prioritisation. Therefore, the original recommendations of the regulatory impediments research work were updated as follow:

1. Category 1: Regulations and Legislation under DSBD Control –

The revised recommendations have reaffirmed the initial recommendations that DSBD to use its Mandated Legislative Powers, by using Section 18 of the National Small Business Act 102 of 1996 (NSBA) Chapter 4, General Provisions, Sections 18 2 (b) - (e) and 3 by notice in the National Gazette guidelines to address identified DSBD’s controlled legislations causing barriers to SMMEs and Coops by conducting further consultations and impact assessment as shown such as - National Business Act 71 of 1991 and the Businesses Amendment Act 186 of 1993, National Small Enterprises Act 102 of 1996 (and as amended in 2003), National Small Enterprise Amendment Bill 2021/22, and Cooperatives Development Act No 15 of 2005, Business Licensing Bill, 2023, and agencies related regulations, legislation, and procedures. The immediate work of the next financial year will on the engagement of State Attorney, the SA Law Reform Commission; formulation of new technical working groups, and participation in the existing committees such as the department’s Intergovernmental Relations (IGR).

2. Category 2: Economic Cluster Departments Control and Influence

DSBD to use advocacy by working with national departments, provinces and local governments on administrative inefficiencies related specific regulations and legislation impacting negatively on SMMEs and Co-operatives, requiring close involvement and consultation on: National Liquor Act 59 of 2003 & Liquor Amendment Bill of 2023, the National Road Traffic Act of 1996 & Traffic Regulations, National Environmental Management Act 107 of 1998, Companies Act 71 of 2008, Preferential Procurement Policy Framework Act 5 of 2000, Broad Based Black Economic Empowerment 53 of 2003, National Land Transport Act 5 of 2009, Labour Relations Act 66 of 1995, and related regulations, legislation and procedures.

3. Category 3: Local Governance, Development and Planning

Spatial Planning and Land Use Management Act 16 of 2013, Local government legislation such Municipal System, Property Rates, Municipal Finance, related provincial legislation and regulations, by-laws and procedures, related Agencies policies, regulations, processes, and procedures.

It is important to note that not every instance of “red tape” is a regulatory reform priority, we should look at educating our populace in the intent of the law, look to our capacity to administer the law and finally, ensure that our laws are aligned with the economic and social challenges we face as a country.

Inter-governmental Relations Framework

In advancing its advocacy and coordination role for the economic sector, the DSBD is in the process of developing an IGR Reporting and Monitoring Tool which forms part of the IGR Framework for SBD. The Tool introduces indicators for Ease of Doing business that stakeholders in Government that relate to number of legislations reviewed by National departments that affect SMMEs and Co-operatives as well as measures put in place to promote administrative simplification of such legislation. The department, in collaboration with National Treasury, Salga & COGTA, is investigating modalities to deploy the Reporting and Monitoring tool for adoption through the three spheres of government.

Reply:

I have been advised that:

(a) The Act requires the Minister to determine the constitution for the Advisory Body through an open and transparent process. The draft constitution for the Advisory Body has been approved by Minister and published in the government gazette for public comments.

Once comments have been received the final adjustments will be finalised and presented to Cabinet. After the final endorsement by Cabinet the final constitution will be published in the government gazette and the recruitment for the appointment of members of the Advisory Body initiated in June 2024.

Furthermore, the Department of Small Business Development (DSBD) facilitated consultations with the National Treasury on the appropriate level of category for remuneration for members of the Advisory Body and in addition a remuneration policy was approved in consultation with the Department for members of the Advisory Body. This will coincide with prescripts for remuneration for members of statutory bodies as prescribed by the National Treasury.

(b) The primary function of the Advisory Body will be to advise the Minister on broad areas that affect small enterprise growth, including national standards pertaining to small enterprise development and regulation, existing or proposed policies that may affect small enterprises, programme interventions and their impact, the impact of existing legislation on small enterprises and constraints that affect the viability of small enterprises into value chains amongst others. The Advisory Body constitution will be finalised through public participation.

Reply:

I have been advised that:

Both sectors are catered for through the Small Enterprise Finance Agency (Sefa) funding through the Township and Rural Entrepreneurship Programme (TREP), provided they meet the requirements.

There is a plan to support not only small businesses in electricity and plumbing but to fund small businesses in the built environment value chains. To this end, sefa has partnered with Construction Industry Development Board (CIDB) to fund small businesses in the construction and built value chains: construction, plumbing, electricity, carpentry, general buildings maintenance, etc. The total budget for this support is R300 million and sefa is committing R150 million and the CIDB is also contributing R150 million for the benefit of the small businesses in these sub-sectors. The MoU between the two entities was signed in February 2024, and sefa as the implementing partner in this programme is currently setting up the systems and the implementation processes.

Reply:

The Department of Small Business Development has two entities reporting to it, which are Small Enterprise Finance Agency (sefa) and Small Enterprise Development Agency (Seda):

I have been advised that:

sefa disbursed approximately R413 million between December 2023 and end of February 2024. About 66% of the total disbursements emanated from the Wholesale Lending Channel activities via the Microfinance and the Credit Guarantee (see the highlight in the table below).

Financial Year 2024	FY 2023/2024 (1 Dec 2023 - 29 Feb 2024)
Loan SubProgramme	Disbursed Amount (R)	% of total disbursements
Direct Lending Loan Programme	R26 071 093	6.31%
ER - DL - Artisans Loan Programme	R953 761	0.23%
ER - DL - Automotive Loan Programme	R2 566 751	0.62%
ER - DL - BakConf Loan Programme	R799 906	0.19%
ER - DL - Butcheries Loan Programme	R1 667 729	0.40%
ER - DL - OpenAirFood Loan Programme	R2 771 870	0.67%
ER - DL - Personal Care Loan Programme	R174 858	0.04%
ER - DL - Retail Loan Programme	R6 585 176	1.59%
ER - DL - SEntManfct Loan Programme	R12 536 551	3.03%
ER - DL - TexClothLeat Loan Programme	R1 423 065	0.34%
EU - ESD Loan Programme	R4 920 856	1.19%
Funds	R23 235 626	5.62%
Land Reform	R9 908 225	2.40%
Micro-Finance	R115 286 615	27.90%
Portfolio Credit Guarantee	R156 334 505	37.83%
Purchase Order Finance Loan Programme	R9 492 039	2.30%
SBIF WL	R8 977 882	2.17%
Spaza Shop Loan Programme Facility	R4 763 500	1.15%
Supplier Credit Guarantee	R22 360 398	5.41%
Youth Challenge Fund Loan Programme	R2 407 892	0.58%
Total	R413 238 299	100.00%

Furthermore, the total amount Seda has spent on Enterprise Development fund for the period 1 December 2023 to 29 February 2024 is R10,406,609.85. Other client related expenses include seminars and workshops to the value of R1,637,743.66 and Programme or project related expenses amounting to R8,039,136.91. Programme or project related expenses include but not limited to International Market Access, projects for focused groups such as women, the disabled and youth, and projects in collaboration with MerSeta, Wholesale and Retail Seta and the National Skills Fund.

Seda has also realised that there are still several areas where entrepreneurs and SMMEs need to travel far to access Seda services especially rural areas. Seda has therefore established 80 service access points and has disbursed R2,791,851.73 for the period 1 December 2023 to 29 February 2024.

Reply:

I have been advised that:

1. Since its inception in the 2021/22 financial period, the Youth Challenge Fund (YCF) was allocated a budget of:

(a) R296 459 000,

(b) As at 19 February 2024, sefa had disbursed R152 597 678 to 44 Youth-owned businesses under the Youth Challenge Fund.

2. The YCF provides support to youth start-up businesses/enterprises that meet the following criteria:

• Are between the age of 18 to 35 years.
• Majority youth-owned with at least 51% youth shareholder/s.
• Registered with Companies and Intellectual Property Commission (CIPC) and be prepared to register with the South African Revenue Service (SARS) and Unemployment Insurance Fund (UIF).
• 100% South African owned.
• Are adequately involved in the day-to-day operation and management of the business, with at least one or more of the members being full-time employees of the business, especially the main applicant.
• Prepared to participate in Business Development Support (BDS) and mentorship (pre and post).
• Commercially viable, sustainable, and feasible business idea.

3. Yes, there has been applications that were declined for funding for youth-owned businesses due to a number of specific reasons listed below:

• Incomplete applications.
• Adverse credit record.
• Application above the maximum funding threshold.
• Lack of off-take agreements.
• No identified market.
• Lack of financial statements for existing businesses.
• Commercial viability.
• Youth ownership not being clear.
• Non-compliance with industry regulatory requirements.

Letters of decline were sent to the applicants stating the reasons why their applications were declined or could not be processed further with some of the applications advised to contact the Small Enterprise Development Agency (Seda) for business support. The applicants are advised to re-apply once all the issues listed above are sorted. Some of the applications have been reallocated to the Township Rural Economic Programme (TREP) as it was relevant to them.

Reply:

I have been advised that:

1. At the time of consolidating the response to the Parliamentary question 4157, funding applications for 66 youth-owned businesses were approved and funding was disbursed to 42 youth-owned businesses. Since the data is captured on a live system, as of 19 February 2024 71 youth-owned businesses have been approved for funding to the tune of to the tune of R228 730 052,79, and 44 youth-owned businesses received funding to the tune of R152 597 677,84 as per the attached spreadsheet.

2. The fund is implemented by the Small Enterprise Finance Agency (sefa) on behalf of the Department of Small Business Development (DSBD), then sefa processes are followed to approve and disburse the funds to eligible applicants. The approval of applications takes place at the Credit Committee level, once approved, the contracting (legal process) takes place between sefa Officials and the client and then the loans are disbursed. After disbursements, the client’s file is handed over to the Post Investment Monitoring (PIM) Department. In the case of equipment or machinery purchase, when the supplier delivers, the Investment Officer (IO) or the PIM official are present at the client’s premises to verify that the goods are being delivered as per the paid invoice. Within thirty days post the disbursement, PIM conducts client visits to ensure that the business continues to function in line with what was agreed upon and approved by the Credit Committee. When the loan repayments are due, PIM raises instalments, through the Collections Department, and collects payments from clients’ accounts via the debit orders.

Reply:

I have been advised that:

(a)&(b)The Entrepreneurship in Schools programme is a partnership that involves a lot of private sector stakeholders. The owner and custodian are PrimeStars, the Corporate Social Investment (CSI) arm of Prime Media. Other partners include the following: SAPPI, the Small Enterprise Development Agency (Seda), EOH, Allan and Gill Gray Philanthropies, Omnia, 3M, AECI, Safripol, Mulilo, BTE Renewables, Richfield, University of Johannesburg, Raizcorp, Johannesburg Stock Exchange (JSE), Allan Gray Orbis Foundation, Zutari, Women’s Development Business, Buhle Waste, Proudly SA, Uber, Tourvest Travel Services, Protea Hotel Marriot, Sizwe IT, Versapak, Airlink, Nando’s and Lift.

IMPLEMENTATION APPROACH

Since the inception of the programme, the Seda has supported seventy-six thousand nine hundred and ninety-one (76 991) beneficiaries with a budget spent of R3 million as per table below:

NO	FINANCIAL YEAR	NO OF BENEFICIARIES	BUDGET SPENT
1.	2019-2020	12,030	500,000
2.	2021-2022	11,513	500,000
3.	2022-2023	13,218	500,000
5.	2023 -2024	13,109	500,000
	TOTAL	76,991	3,000,000

The programme makes use of the cinema infrastructure to expose Grade 9 to 12 learners and Educators to entrepreneurship through an entrepreneurial education movie aimed at empowering and entertaining secondary school youth about entrepreneurship and starting their own businesses. The theme changes every year, but the focus is always on encouraging business ideas that will solve existing social, environmental and health problems.

The programme has two main components: creating awareness about entrepreneurship and financial literacy (hence the big number at the beginning) and the competition which culminates into a bootcamp at the end of the year.

The total number of schools that benefited from the programme over the six-year period are six hundred and twenty six (626). The role of Seda is as follows:

• Assists with the running and judging of the final competition as “investor pitching” including master classes on “technology and innovation” and “pitch preparation”.
• Provide top three winners with access to relevant Seda support. These potential entrepreneurs would have much more refined ideas, stronger business cases, knowledge, and experience, to work with, to be guided through the process of setting up a business, if necessary, with partners over 18 years of age, in a schedule that does not jeopardise their schooling.
• Seda is committed to assist all the beneficiaries of the programme and they are encouraged to visit Seda branches to turn their ideas into businesses.

STATUS OF THE PROGRAMME TO DATE FOR 2023/2024 FINANCIAL YEAR

• Thirteen thousand one hundred and nine (13 109) learners and two hundred and five (205) educators were exposed to entrepreneurial education film.
• 98% of the beneficiaries were Africans and the gender representation was as follows: 57% of females benefited from the programme whereas males were 43%.
• Learners were encouraged to enter the competition and adjudication of the entries took place. Ten (10) teams were selected and participated in a boot camp that took place on the 8-11 December 2023. The dragon’s den was hosted on 11 December 2023 at Protea Hotel, Wanderers in Johannesburg to choose the three viable business ideas.
• The Step-Up 2 A Green Start-Up National Youth Entrepreneurship Awards ceremony was hosted on 12 December 2023 at Nedbank Rivonia in Sandton. The Minister of Small Business Development, Ms. Stella Ndabeni-Abrahams, graced the event with her presence and delivered the keynote address.
• The finalists comprising of twenty-eight (28) learners and nine (9) educators were awarded with over R4 million in prizes which included bursaries, incubation, entrepreneurial programmes, shopping voucher, application development, seed funding and tablets. These came from the different sponsors of the programme that are listed above. The finalists represented Gauteng, KwaZulu Natal, Eastern Cape, Mpumalanga and Northern Cape.
• A team of three learners from Leap Science and Maths in Alexandra, Gauteng were announced as overall winners of the 2023 Step Up 2A Green Start Up National Youth Entrepreneurship Awards for their business solution of producing of eco-brick which was made from recyclable materials such as plastic, paper or glass brought together by a little cement. Those eco bricks will be used to build houses for those in need and address the challenges related to inadequate housing, pollution, unemployment and poverty within their community and the country as whole.
• The second winner was from Mehlwana Secondary School in Ogies, Mpumalanga. They introduced a way of collecting waste through smart bins. These bins are paired with a mobile app that automatically alerts service provider when the bins reach the full capacity and ready to be collected.
• The third winner was from Sir Pierre Van Ryneveld High School in Kempton Park, Gauteng, their business idea centered on sustainable construction for those in need by using repurpose recyclable materials into wall panels to build houses.

UPDATES ON 2022 WINNERS

• The first-place winner was Sibusisiwe Comp Tech High School from Umbumbulu in KwaZulu-Natal. The idea was to create an affordable source of energy using eco-friendly coal sourced from marula nuts. The Eco Trio received R20 000 from the Youth Start Foundation to start a business. They started a business of nut processing in January 2023, this entails converting marula nut into coal.
• The second-place winner was Leap Science and Maths High School from Alexandra in Gauteng. The idea was to make use of the recycled paper to create “eco log bricks” as an alternative to coal used for fire. The eco log brick making business was not implemented as planned due to lack of resources. As both first and second place winners are still in grade 12 this year, after writing their exams, the Seda branches (eThekwini and Johannesburg) will train them on basic business skills and assist them to turn the idea into a business.
• The third-place winner was Buhlebezile Secondary School from Thokoza in Gauteng. The idea was to extract raw materials from electronic devices, reselling precious metals and repurposing the plastic waste into tar used for road construction. The team completed their matric in 2022 and each member received a degree bursary from Richfield Institute to the value of R112 000. Both students are studying at Richfield Institute and have applied to Johannesburg Business School of Entrepreneurship Development Programme to study further.

IMPACT OF THE PROGRAMME TO ALUMNI

• Gontse Selaocoe is the owner of All Day Jam based in Orange Farm in Johannesburg which employ 5 people. Mr Selaocoe took part in the programme in 2017 when he was in Grade 11 and made it to Top 10. He contacted Seda for assistance, he was assisted with product testing, marketing assistance and he participated on the art of pitch for funding competition. He was one of the winners of 2022 Seda National Pitch for Funding Champion in which he received the R500 000.
• Palesa Machaka is the owner of Coiggy (Pty) Ltd – Fintech company with 2 employees. Primestars supported her on her journey, offered resources to start her business and referred her to relevant network. Coiggy (Pty) Ltd is a fintech start-up company with the aim of fostering financial savviness amongst the youth in Southern Africa – by revolutionising the use of loyalty programmes and breaking stereotypes around saving and investing money. This company planned to redefine the financial ecosystem, making financial services more secure and inclusive for all, from a township to global scale.
• Brian Mlambo is a CEO of Akha Ventures. Akha Ventures is at the forefront of championing digital transformation in Africa. Rooted in a profound dedication to the empowerment of small and medium-sized enterprises, the company serves as an indispensable ally to SMEs, ensuring they are equipped with the pivotal tools and insights required to flourish in today's digital era. This unwavering commitment to transformation has borne tangible results, with Akha Ventures successfully aiding over 5,000 businesses in establishing their digital presence and organizing, more than 100 business-centric events, including insightful masterclasses and fireside chats which has enabled them to build a database of over 35,000 SMEs in South Africa in 5 years.

Reply:

I have been advised that:

1. According to the records of received sponsorships, donations and gifts, the Department of Small Business Development (DSBD) can confirm that no sponsorships, (b) donations and (c) financial transfers for lawfare and/or any other purposes were received from any (aa) Qatari, (bb) Iranian and/or (cc) Russian organ of state, organisation and/or resident since 1 January 2021 up to 23 February 2024 by the (i) Minister of Small Business Development, (ii) her department and (iii) officials of her department.

Reply:

I have been advised that:

a) In a quest to cultivate an enterprising culture amongst the youth, the Department of Small Business Development (DSBD) has designed support measures for youth-owned businesses. This presents much greater opportunities for isolated and marginalised youth into the economic mainstream in respect of which targeted measures are necessary for accelerating the promotion of youth businesses and self-employment. It is in this light, that the DSBD is increasingly expanding its programmes but more importantly, designing targeted instruments assisting youth owned enterprises with enterprise development.

As at the end of Quarter 2 of the current financial year, the Small Enterprise Development Agency (Seda), with limited resources, has provided 10,616 skills development and other business development support for youth entrepreneurship which may include interventions such as, but not limited to Financial Management training, Access to funding, Basic Business skills training, Information and Business Advice, Business Plans, Training and Mentoring, entrepreneurship awareness, etc.

Seda has an Entrepreneurship in Schools Programme that encourages learners to consider entrepreneurship as an alternative career to employment. The main objective of the programme is:

1. To influence the mind set of learners by encouraging them to become job creators instead of job seekers once they leave the schooling system;
2. To equip learners with entrepreneurial knowledge and skills needed to start and manage their businesses; and
3. To improve entrepreneurial activity amongst the learners and educators.

Entrepreneurship in schools (Step up to a Start Up) is a programme together with Primestars that will support educators through boot camps to create entrepreneurship awareness amongst the youth and educators.

Furthermore, through Sefa the department has the Youth Challenge Fund (YCF) – the primary objective of the fund is to provide support to youth Start-Up enterprises which are formally registered and is thus seen as an approach to assist in ensuring the economic participation of young people. This is intended to support most promising young entrepreneurs intending to scale-up and growing their businesses.

b) Since its inception the Youth Challenge Fund in November 2021, the programme has approved loans to the value of R227 798 265 to 66 youth-owned businesses and has disbursed R150 348 036 to 42 youth-owned businesses. On the other hand, Seda has also signed a three-year MoU with the National Skills Fund. It includes Work Integrated Learning for 1500 unemployed graduates who will be trained to provide mentorship to 12 500 micro enterprises.

In addition to the above, there other events that seek to orientate young people around entrepreneurship development and opportunities:

1. Seda Eastern Cape in collaboration with the KSD TVET college presented an information session to eighty (80) youth on entrepreneurship awareness. The event took place from on 6-12 June 2023.
2. On 10 May 2023 the Sol Plaatje University (SPU) hosted a Career Fair in partnership with public entities to share Career and Personal Development Opportunities for Graduates to advance employability and Business Opportunities in the Northern Cape.
3. So are the other events such as Seda Eastern Cape’s Amathole Branch which held an eco-system stakeholder meeting by the Border Kei Chamber of Commerce on 22 June 2023. The Chamber is in the process of opening a youth desk focusing on Youth Development in its entirety. The youth desk comes as a follow-up to their annual Youth Reality Conference that the Chamber has been hosting for the past few years. The event attracts over two thousand (2000) young people in and around Buffalo City Municipality (BCM). The chamber has identified challenges that the young people face, and in collaboration with partners seeking to address some of these challenges. One of the challenges being the high level of unemployment among young people.
4. Seda Nkomazi branch in Mpumalanga made a presentation on Seda’s offerings at the Aids Foundation of South Africa from the 30 May -1 June 2023 in Mangweni, Buffelspruit and Naas respectively. The purpose of this collaboration was to implement a young women focused programme, of empowering them with skills including employability, entrepreneurship, and financial literacy.
5. The Nkangala Branch and other stakeholders in Mpumalanga participated in the youth month seminar “Leave Your Legacy” organised by Mpumalanga Economic Growth Agency (MEGA). A presentation on Seda products and services, opportunities that are available to youth and Township and Rural Entrepreneurship Programme (TREP) was done. The event was attended by twenty-one (21) youth entrepreneurs, and it took place on the 14 June 2023.

These are some few activities amongst many that seek to orientate young people on entrepreneurship development and available support services provided by the SBD Portfolio.

Reply:

Yes the Department of Small Business Development (DSBD) purchased new vehicles during the Minister’s appointment to office. To note however, when the Minister was appointed in the department there was a procurement process already underway for one (1) vehicle for the previous Minister was later transferred to the Department of Communications and Digital Technologies.

Therefore, in total Eight (8) vehicles were purchased since the Minister was appointed in the department.

To avoid the cost of hiring vehicles within the department five (5) vehicles were purchased and the details of the vehicles purchased are provided below.

Detail	Breakdown	Cost of each vehicle	Total cost
Eight (8) vehicles were purchased: three (3) for Minister of Small Business Development and five (5) for departmental pool purposes.	One (1) vehicle was procured in 2021/2022 financial year and was transferred to the Department of Communications and Digital Technologies	2021/22: Audi Q5: 1 @ R726 469.25	R 726 469.25
	Five (5) departmental pool vehicles Nissan Almera 1.5 procured in 2022/2023 financial year	2022/23 Nissan Almera: 5 @ R242 955.03 each	R1 214 775.15
	Two (2) vehicles were procured in 2023/2024 financial year and allocated to DSBD Pretoria and Cape Town Offices.	2023/24: Audi Q5: 2 @ R790 000.00 each	R1 580 000
			R3 521 244.40

(b) Make and model of each vehicle:

Year	Make of the Vehicle	Model of each vehicle
2021/2022 financial year	Transferred to DCDT: Audi Q5	Model: FYGCFY-E00, Audi Q5 40 TDI 140KW quattro S line tronic, and Paint & Trim
2022/23 financial year	Five (5) X Nissan Almera	Model: Nissan Almera 1.5 Acenta MT
2023/2024 financial year	Audi Q5	Cape Town: Model: FYGAFY-E00 Audi Q5 40 TDI 140KW quattro S tronic.
	Audi Q5	Pretoria: Model: FYGAFY-E00 Audi Q5 40 TDI 140KW quattro S tronic

Reply:

I have been advised that:

The Department of Small Business Development (DSBD) has not assessed the sectoral needs of the small business development segment of the economy. However, there has been work around the challenges faced by SMMEs and Co-operatives. These challenges relate to excess red tape, access to finance, access to markets, a lack of inclusion of SMMEs in the value chains of big business, lack of access to information and a lack of skills and knowledge on entrepreneurship. To address some of these issues, the DSBD has formulated and executed several interventions aimed at ensuring the participation of MSMEs in the mainstream economy. These include, inter alia, increasing access to developmental funding, expanding support to township and rural enterprises, building access to markets, and improving the regulatory environment. These challenges remain prevalent in most of the sectors in which small businesses operate.

To demonstrate its commitment to the development of SMMEs in the various sectors of the economy, the DSBD established the Small Enterprise Manufacturing Support Programme (SEMSP), as one of the responses to the needs of the small enterprises operating within the manufacturing sector/industry. The programme is considered as one of the contributions to the localization strategy and supports manufacturing enterprises to increase the contribution of manufacturing within the Gross Domestic Product (GDP) of the South African economy.

The main intention of the Small Enterprise Manufacturing Support Programme (SEMSP) is to replace imports through locally manufactured goods thereby increasing small enterprises production capacity, growth, sustainability, and competitiveness. The support received by small enterprises through the SEMSP includes financial and non-financial to enhance technical skills, business infrastructure support (buildings and machinery) as well as market access. The programme prioritises various categories of manufacturing such as light consumer goods, hi-tech and industrial production which are associated with the sub-sectors such as furniture, basic iron and steel, petroleum and chemical, food and beverages (agro-processing), electrical, green technology etc.

Thus far, SEMSP performance overview for the past three financial years (i.e., 2020/21 to 2022/23) reflects approvals for all nine provinces at about R800M. The first year disbursements were at about R320M, second year being R237M and third year R274M as reflected below.

Figure 1: SEMSP approval 2020/21 to 2022/23

The DSBD has increased its involvement in the Cannabis industry. The aim of this involvement is to address some of the challenges faced by MSMEs in the sector. These challenges include, among others, regulatory environment, research, and development (Biomass quality, processing, and product quality), branding (markets), and financing.

The DSBD is working on a Cannabis Pilot Project with the Council for Scientific and Industrial Research (CSIR) to conduct research and gather information regarding the how we could create opportunities for the creation of small enterprises across the Cannabis value chains, as well as on establishing and increasing the manufacturing capacity of the South African Cannabis industry.

In the main, this initiative is aimed at the development of interventions that are informed by evidence; the promotion and advocacy for an enabling policy, legal and regulatory environment, especially advocacy for ease and accessible issuing of cannabis producing operating licenses for start-ups. It is also the intention of the Pilot Project to develop targeted instruments to support small enterprises (Business Development Services and Financial Support). The development of the Cannabis industry will require a collaborative effort from relevant stakeholders. It is for this reason that we encourage strategic partnerships (public and private) to be formed to advance an inclusive, sustainable, and globally competitive Cannabis industry in South Africa.

The DSBD has developed the Cannabis Small Enterprises Support Plan (CSESP), the aim of which is to develop an instrument for the support and promotion of small enterprises within cannabis industry value chains.

The DSBD–CSIR have also collaborated to establish an Incubation Programme that assists MSMEs to partake in the Cannabis industry. The intention of this programme is to conduct primary (not cultivation/harvesting), secondary, and downstream processing of Cannabis and Hemp biomass. Moreover, there is specific focus on the formulation and re-iteration of low THC cannabis/hemp product prototypes, as well as the upscaling and testing of the range of low THC cannabis-based products for the selected enterprises. The tail end of the process requires the partners to facilitate contract manufacturing of at least 100 market ready samples, at GMP facility, for each MSME to test the formal markets.

To respond to the needs of MSMEs operating in township and rural areas, the DSBD formulated the Township and Rural Entrepreneurship Programme (TREP). The Scheme is aimed at supporting small enterprises to participate in the rebuilding and restructuring of the economy in townships and rural areas, improve the quality and competitiveness of small enterprises for both domestic supply and export market, and seize the opportunities in the various sectors of the economy. The Scheme supports all small enterprises operating in townships and rural areas that meet the qualifying criteria including but not limited to sectors such as Clothing & Textile, Bakeries & Confectionaries, Tshisanyama and Cooked Food, Retail (including restaurants, car washes, general dealers, etc.), Automotive, Personal Care, and Artisans.

To penetrate various local and international markets, the DSBD is implementing a localisation programme with the intention of building the manufacturing capacity of SMMEs. It is anticipated that the increased capacity and capability of SMMEs will assist with market access opportunities for SMME manufactured products. Essentially, the DSBD and its agencies, the Small Enterprise Development Agency (Seda) and the Small Enterprise Finance Agency (sefa), provide support and preparation of SMMEs towards import replacement and export market penetration.

On the regulatory environment front, the DSBD continues to roll out the red tape reduction guidelines – working together with municipalities. Several municipalities have been covered across the country.

Reply:

I have been advised that:

The Department of Small Business Development engaged the National Treasury in March 2023 for funding to assist SMMEs to deal with the effects of load shedding under a programme called “Energy Relief”, also known as “the Power Purchase”, and the request was not approved by the National Treasury.

An update on this was provided to the Portfolio Committee.

Reply:

I have been advised that:

The Department of Small Business Development (DSBD) has not institutionalised the provision of emergence relief measures to small, medium and micro enterprises due to limited budget; however we will continue to apply to National Treasury whenever there is a pandemic or a disaster.

Reply:

I have been advised that:

The Department of Small Business Development engaged the National Treasury in March 2023 for funding to assist SMMEs to deal with the effects of load shedding under a programme called “Energy Relief”, also known as “the Power Purchase”, and the request was not approved by the National Treasury.

Reply:

I have been advised that:

a) The Department of Small Business Development (DSBD) through the Small Enterprise Finance Agency (sefa) provided support to small businesses during the Covid-19 pandemic. sefa contributed towards the Covid-19 emergency fund (relief programme) which was aimed at providing relief to small businesses during the pandemic. Through the fund, sefa disbursed R316 million to 1 144 small businesses. Of this amount, R28 million was disbursed to businesses in townships and R60 million were to businesses in rural areas.

(a)(i)&(ii)

b) An additional R10 million was disbursed towards business growth and resilience facilities.

R105 million has been approved for SMME payment holidays. The Department further introduced the Economic Recovery Programme to assist small businesses in the South African economy. The economic recovery programme disbursed R1.3 billion to small businesses operating in various provinces as per the table below. The disbursements to small businesses operating in townships amounted to R552 million and R392 million to those in rural areas.

c) Through the Covid-19 relief scheme, a total of 1 161 clients were funded. As at end of September 2023, 450 clients had their loans settled, 407 are still honouring their payment obligations and 304 clients are not paying.

d) The businesses that have settled their loans are no longer under sefa monitoring. 450 clients are still honouring their payments although their term has expired. These businesses are still operational and sefa is considering restructuring these loans. The 304 clients which are not paying sefa and are handed over to pursue collection. An exercise is underway to re-verify their existence.

Reply:

I have been advised that:

a) In Encouraging entrepreneurship in township and villages:

The Department of Small Business Development (DSBD) has in place the Township and Rural Entrepreneurship Programme (TREP) which aims to assist informal, micro and small enterprises grow their businesses. The financial package is structured at a maximum value of R1 000 000 that consist of:

• Maximum of R1 000 000.00 towards working capital, cost of equipment, or any other CAPEX (paid directly to the supplier where applicable).
• The financial package will be offered in the form of a blended finance with 50% of the total approved amount being a grant i.e., a maximum grant amount of R 100 000.00.

TREP supports all small enterprises operating in townships and rural areas that meet the qualifying criteria including, but not limited to, the following:

• • Clothing and Textile
  • Bakeries and Confectionaries
  • Tshisanyama and Cooked Food
  • Retail (including restaurants, car washes, general dealers etc.)
  • Automotive
  • Personal Care
  • Artisans

Also, the Small Enterprise Development Agency (Seda) has a big network of offices in the country, with 53 branches and 52 co-location points. Our co-locations are specifically established to extend access to Seda services in underserviced and rural South Africa. It is also realised that there are still several areas where entrepreneurs and SMMEs still must travel far for them to access services. Seda has therefore established 80 service points or access points. Seda will continue to expand service delivery to rural communities through various modalities whilst striking a sound balance between community needs, budget availability and collaboration with ecosystem partners. Furthermore, the organisation has 110 incubators, of which 32 are based in rural areas.

The agency also employs alternative mechanisms for ensuring that services are available, like mobile offices. Information is provided through DSBD, Seda and the Small Enterprise Finance Agency (sefa) websites and contact centers. Where possible, Seda also provides virtual interaction with those clients that can attend, for example online training and webinars. To this end, 801 clients attended virtual sessions during the 2022/23 financial year, and 1 630 during the second semester of the current financial year (2023/24). Support includes, amongst others, Pitch for funding, Access to markets, including Pop-up markets, Digital skills development training, Inventory Management Training, etc.

b) Providing sustainable employment to township dwellers:

While the Township and Rural Entrepreneurship Programme (TREP) described in part (a) is aimed at the individual entrepreneur, the National Informal Business Upliftment Strategy (NIBUS) seeks to uplift informal businesses and micro enterprises through a systemic and institutional response collaborating with and supporting local chambers/business associations and municipal Local Economic Development offices to deliver and facilitate access to upliftment programmes aimed at providing sustainable employment to township and rural dwellers, targeting informal business entrepreneurs from designated groups, i.e., women, youth, and people with disabilities.

• 1. NIBUS has two Instruments under its enterprise development pillar, namely the Shared Economic Infrastructure Facility (SEIF) and the Informal and Micro Enterprise Development Programme (IMEDP).
  2. The Informal and Micro Enterprises Development Programme (IMEDP) is a 100% grant offered to informal and micro enterprises from a minimum grant amount of five hundred rand (R 500.00) up to a maximum of ten thousand rand (R10 000.00) to assist them in improving their competitiveness and sustainability.
  3. The key objective of this financial facility is to provide developmental support to informal and micro businesses that are operating in townships and rural areas of South Africa with an emphasis on support for designated groups, i.e., women, youth and persons with disabilities.
  4. The programme aims to develop and strengthen the capacity of credible informal and or micro enterprises to be sustainable through the provision of access to information, appropriate business development support and business infrastructure (machinery, tools, equipment, and stock) and excludes (working capital, conversions, clothing) for eligible applicants.
  5. Going forward, it is planned that Informal and micro enterprises are to be supported using the DSBD’s Informal and Micro Enterprise Development Programme (IMEDP) capped at R 30 000.00 for informal businesses and the Small Enterprise Development Agency (Seda) to support micro businesses with amounts above the R 30 000.00 threshold.
  6. The funding will be 100% grant for the informal sector and subject to availability of funds.

During the 2022/23 financial year, the Small Enterprise Development Agency (Seda) provided a total of 21 181 skills development and support interventions to township and rural businesses and 10 836 interventions during the second semester of the 2023-24 financial year. These interventions included amongst others Basic Business Skills, Business Start-Up 1, Cybercrimes, South African Revenue Service (SARS) Incentives, Costing & Pricing, Business Planning, Business Model Canvas, Financial Management training, Access to funding, Point of Sale Training, Access to Funding, Business Plans, Mentoring and various others.

Seda also has a dedicated programme, the Basic Entrepreneurship Skills Development (BESD) which was jointly developed by the Agency and German Federal Ministry for Economic Cooperation and Development via Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) since 2012. GIZ left the programme in December 2016 and since then the programme is funded by the National Skills Fund for an amount of R84 million. The BESD approach utilises coaching as an innovative methodology to facilitate and reinforce learning and development support to emerging entrepreneurs. A total of 2 038 Emerging Entrepreneurs were supported through the programme to date. All the project sites across the country were completed in 2019, we are currently utilising remnants of the budget to benefit more SMMEs.

Seda, through its Learning Academy, has also developed different training programmes. These programmes are credit bearing and accredited by the Services Seta. Quality training aims to assist organisations of all types to implement and operate the Quality Management System (QMS) to increase effectiveness, consistency, and customer satisfaction, explain the benefits of implementing QMS and understand the quality, management principles. Whilst Food safety introduces Food Safety, Understand Pre-Requisite programme, HACCP (Hazard Analysis, Critical, Control, Point) system and HACCP principles and Implementing a Food Safety Management System (SANS 22000:2019.).

Seda has also forged the following skills development partnerships namely:

• A 3-year partnership with the National Skills Fund (NSF) to benefit 14 000 beneficiaries for a total budget of R 592 275 000. The aim of the project is to recruit unemployed graduates with Accounting and Business Management qualifications to be trained on New Venture Creation, Coaching, and Mentorship Programme to enhance their skills to provide support to Micro Enterprises. Seda will use coaching as an innovative methodology to facilitate and reinforce learning and development support to Micro Enterprises and the unemployed graduates will be trained on new venture creation as well as business coaching to enable them to transfer skills and knowledge to Micro Enterprise owners.
• Seda and Wholesale and Retail Seta signed an agreement to support one thousand (1 000) Tuckshops, General Dealers to the value of R 9 975 000.
• In 2021, DSBD, Seda and Merseta signed Agreement for Merseta to release a discretionary grant to Seda to the value of R 50million. The funding will be provided in a phased approach over a 3-year period. The purpose is to train Small Enterprise in the Automotive Trade Sector as well as facilitate Artisan Recognition of Prior Learning (ARPL).
• A partnership between Seda, GIBBS and the Cherie Blair Foundation for Women was forged. The Cherie Blair Foundation has an award-winning Mobile App that offers women entrepreneurs essential business training and support on the go. It features a range of learning tracks on topics including launching a business, accessing finance, expanding market access, e-commerce, and mobile money.

During the first two quarters of the 2023/24 financial the Township and Rural Entrepreneurship Programme supported the sustaining and/or creation of 10 884 jobs, whilst 38 059 jobs were supported in the 2022/23 financial year.

Proposed future interventions will utilise a macroeconomic approach that combines the expertise of public and private sector partners to counteract resource and capacity constraints.

Furthermore, provision of sustainable employment to township dwellers the level of the social economy and community empowerment levels include through the Co-operatives Development and Support Programme (CDSP), for new and budding primary co-operatives.

1. There is a start-up grant of up to R1,5 million, up to R2.5 million for growing primary co-operatives and up to R5 million for secondary co-operatives.
2. All co-operatives to be funded are subjected to co-operative governance training so as to ensure that they understand what is expected from them in running a successful organisation.

Reply:

I have been advised that:

(a) The total amount spent on the Minister and her Deputy Minister’s travel costs in the 2022-23 financial year is R2 615 876.16

(b) The number of trips the Minister and her Deputy Minister undertook in the specified financial year: 198 domestic trips and 12 international trips

(c) The amount spent by her department on:

(i) Hotel: R474 660.68

(ii) Residential: R0.00 (The Deputy Minister has been allocated state accommodation in Cape Town and Pretoria and DSBD has not incurred costs on rental or maintenance as it is the Department of Public Works and Infrastructure (DPWI)-Prestige responsibility. The monthly fee is charged from the Deputy Minister’s salary in line with the lease agreement signed by herself (an amount of R1 196.57). The Department of Small Business Development (DSBD) has only spent on relocation costs and related housekeeping services.

(iii) Other accommodation for the Minister and her Deputy Minister: R0.00

(d) The amount of any further costs incurred by her department in relation to such travel: R2 141 215.48, this is the cost of domestic air travel, car hire and international air travel (see table below).

DSBD - Minister and Deputy Minister Travel Expenses for the Period April 2022 to March 2023
Category	Number of transactions	Amount “R”
Domestic Air Travel	195	783 799.39
Accommodation Domestic	98	474 660.68
Car Hire	62	1 234 134.69
International Air Travel	12	123 281.40
Total	367	2 615 876.16

Reply:

In 1994, the new government inherited a highly unequal and concentrated economy, with very low levels of entrepreneurship, little to no black economic ownership, and an extremely weak and fragmented SMME support eco-system.

This made South Africa an outlier. SMMEs play a major role as a driver of growth and employment in both developed and developing economies.

To realise the growth and jobs potential of SMMEs, Government established the Department of Small Business Development in 2014. The mandate of the Department Small Business Development (DSBD) is defined: “to lead and coordinate an integrated approach to the promotion and development of entrepreneurship, Small, Micro and Medium Enterprises (SMMEs) and Co-operatives, and to ensure an enabling legislative and policy environment to support their growth and sustainability”.

Since its inception, the work of the DSBD has been driven by several key policy frameworks, including the National Development Plan, Vision 2030, which is aimed at harnessing the potential of SMMEs, Co-operatives and the informal sector, and sets specific goals for the small business sector as follows:

• To enhance economic growth through SMMEs and Co-operatives as assessed through an increased contribution by the sector to GDP.
• To enhance economic growth through SMMEs as assessed through an increased contribution by the sector to GDP.
• To create 9 million of South Africa’s 11 million needed jobs by 2030 through the SMME sector.
• To reduce the cost of regulatory compliance and promote ease of doing business for SMMEs and ensure policy coherence through partnerships among for SMMEs and ensure policy coherence through partnerships among key societal players, business and government.

The work of the DSBD has until recently been framed by the Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises (ISPESE), which was reviewed and a new national SMME and co-operatives strategy developed – the National Integrated Small Enterprise Development Strategic Framework (NISED) – adopted by Cabinet and launched in November 2022.

The ISPESE and NISED have been focused on addressing the core constraints faced by SMMEs and co-operatives, including:

• Red-tape and regulatory burdens.
• Market concentration, and lack of access to markets.
• The lack of access to finance, and
• Weak entrepreneurial and business development skills, and

Progress since 2014 is framed around what has been done to address these constraints and create a more enabling environment for SMMEs and co-operatives.

Red-Tape

To address the issues of reduced cost of doing business and regulatory compliance in South Africa, commonly referred to as red tape, the Department of Small Business Development (DSBD) is the custodian of red tape reduction (RTR) for Small, Medium and Micro Enterprises (SMMEs) and has initiated a number of interventions to reduce red-tape for SMMEs and co-operatives.

This includes reviewing the Businesses Act (1991), which was transferred from the Department of Trade Industry and Competition (the dtic) to the DSBD in the 2020/21 financial year. The DSBD has reviewed the Act and is in the process of finalising the Business Licensing Amendment Bill. Recently Cabinet has approved the National Business Licensing Policy for gazetting for public comments, by the end of the term a policy on Business Licensing will have been finalised.

The other piece of legislation which has been reviewed is the National Small Enterprise Act, 1996 (Act No. 102 of 1996). A National Small Enterprise Amendment Bill, 2023, has been developed and is currently before Parliament, National Assembly has referred this to the NCOP for concurrence and this should be finalised by the end of February by Parliament. The amendments:

• provide for the establishment and registration, in terms of the Companies Act, No. 71 of 2008, of the Small Enterprise Development Finance Agency (SEDFA) and the subsequent incorporation into SEDFA of the sefa, the Co-operative Banks Development Agency (CBDA) and the Seda.
• establish of the Office of the Small Enterprise Ombud Service ("the Office").
• enable the Minister to declare certain practices in relation to small enterprises to be prohibited as unfair trading practices.
• propose an amendment to section 20(2) of the Act to provide clarity on the interpretation of the powers assigned to the Minister in amending the Schedule to the Act as well as the definition for small enterprises, to allow for simplification of the Schedule.

The DSBD has also, in 2023, undertaken a “Rapid Review of ALL legislation that impacts SMMEs and Co-operatives” for “regulatory guillotining”, that is, at the level of National, Provincial and Local Government.

The DESBD has also supported red-tape reduction at municipal level, and has supported 23 Districts, 108 municipalities, and 4 Metros to roll out the Red-Tape Reduction Awareness Programme. Recently, the department has piloted the Pilot Administrative Simplification Programme (PASP) in association with KwaZulu-Natal EDTEA, COGTA and SALGA, targeting key red-tape reduction including access to infrastructure (specifically water as it permeates all municipalities), customer/complaints management, municipal policies, by-laws/regulations; land development and SPLUMA, building plan approval timelines/processes; and informal trading management. The idea is to consolidate this is a Municipal Red Tape Reduction Dashboard.

Market access

To address market access, the Department developed and continues to implement the SMMEs-focused Localisation Policy Framework that was adopted by Cabinet during the course of the 2020/21 financial year. At the end of 2022/23 financial year, 807 products produced by SMMEs, and Co-operatives were linked/introduced to domestic markets through working relationships with large retailers and wholesalers across the country against a five-year target of 1 000 products.

To drive localisation, the Department designed a focused Small Enterprise Manufacturing Support Programme (SEMSP) aimed at building and supporting SMMEs participating in the manufacturing value chain. The purpose of the SEMSP is to build a manufacturing sector for an improved industrial base through a focused import replacement programme and build the industrial base for both the domestic market and external market. The Programme aims to contribute to South Africa’s localisation strategy. As at 30 September 2023, SEMSP approvals concluded amounted to R879.2m to 94 SMMEs, facilitating 5295 jobs.

The DSBD has also partnered with the International Trade Centre to improve market access for women-led enterprises. As of 30 September 2023, the total cumulative number of South African members registered on the ITC SheTradesZA platform is 3004, whilst the ITC'S web developers finalise the system update. The Department is continuing to intensify its effort working towards realising its outcome to increase participation of women, youth and persons with disabilities, SMMMEs and Co-operatives in the domestic and international markets.

To date, 188 SMMEs and Cooperatives were exposed to global market opportunities, between 2022/23 and 2023/24, through international missions, exhibitions, and fairs. Our work in exposing SMME products and services to global markets through the Small Business Exported Development Scheme has seen an extension in driving the African Continental Free Trade Area (AFCFTA) markets during the 2023/24 financial year.

The other area of focus for DSBD has been the opening of corporate supply chains for SMMEs and co-operatives. To this end, an Enterprise Supplier Development (ESD) Community of Practice (COP) has been established with the private sector to overcome fragmentation and strengthen the key element of targeted entrepreneurship development. The ESD COP is complemented with an ESD e-learning platform and a series of masterclasses by Seda along with a website for COP member recruitment and the promotion of capacity building events and activities.

Access to finance

Here the focus has been on supporting SMMEs and co-operatives from under-served communities with access to finance, be it direct lending, blended finance, and micro-finance.

There have been numerous instruments designed and impended since 2014. This includes those for supporting SMMEs, Cooperatives and informal enterprises in townships and rural areas such as the Township and Rural Entrepreneurship programme. There are instruments for youth, such as the Youth Challenge Fund, those targeting people with disabilities such as the Amavulandlela Funding Scheme, as well as those implemented during COVID-19 to support SMMEs and Cooperatives experiencing financial distress such as the Business Viability Programme

Since 1 April 2014 to 31 October 2023, the DSBD, through its implementing agency sefa, approved loans to the value of R12.3 billion, disbursed into the South African economy R14.5 billion[1], and provided financial support to 597 473 SMMEs and Co-operatives. These funded clients in turn helped create and retain 809 148 jobs.

In terms of developmental impact:

• sefa disbursed R11.6 billion to enterprises owned by black entrepreneurs,
• R5.5 billion to women-owned businesses,
• R2.9 billion to businesses owned by youth,
• R109 million to enterprises owned by persons with disabilities,
• R1.9 billion to small businesses operating in the townships, and
• R4.4 billion to enterprises operating in rural towns and villages.

The DSBD has also developed an SMME and Co-operatives Funding Policy to ensure improvement in access to finance for SMMEs and Co-operatives. The Policy is now at NEDLAC.

Business Development Services

Much of DSBD’s entrepreneurship and business development support is implemented through Seda. Since 2014, the following has been achieved:

Number of clients reached through entrepreneurship awareness sessions	201 879
Number of clients supported with various interventions	414 205
Number of clients supported through Incubation Programme	69 840
Number of incubation centres established	110
Number of jobs created by supported clients	38 787
Number of jobs sustained by supported clients	62 118

The 110 Incubation Centers and Digital Hubs are aimed at nurturing new and existing small enterprises by providing them with financial and technical advice pertaining to the running of a business. The breakdown of these 110 that are in various stages of implementation is 73 Technology Business Incubators; 31 centers for Entrepreneurship and Rapid Incubation; and six Township and Digital Hubs that focus on various designated sectors within which small business start-ups are functioning.

The goal of increasing incubation centers and digital hubs to 100 by 2024 has already been achieved, and the new focus is on improving governance, independent sustainability and returns on investments.

Conclusion

As is evident, much has been achieved since the establishment of the DSBD in 2014. But much more needs to be done to place SMMEs at the centre of driving the country’s inclusive growth. The merger of Seda, sefa and the CBDA will provide seamless and customised support to the sector but needs to be effectively capitalised to effectively contribute to addressing the triple challenges of poverty, unemployment and inequality, and leveraging the kinds of partnerships envisaged in the NISED.

1. Due to the nature of sefa’s partnership with the intermediaries, disbursements are always higher because the intermediaries roll sefa’s money several times a year before paying it back. ↑

Reply:

I have been advised that:

a) The Department of Small Business Development (DSBD) does not have an instrument to quantify the number of established businesses in a given time. The Companies and Intellectual Property Commission (CIPC) either has to do the analysis of differentiating the registered businesses according to the size class. However, the DSBD agency, Seda, through the Bureau of Economic Research in Stellenbosch undertakes periodic statistical research on the growth of the SMME sector. The latest results show that the total number of SMMEs rose by a significant 148 000 firms (+5.9% year-on-year). This brought the level of SMMEs back to its pre-COVID level. Meanwhile, the total level of employment in the economy remains below its pre-COVID level. Relative to 2021Q3, the number of SMME owners rose by 11.6% to 2.68 million. On an annual basis, the 17% increase in formal SMMEs is encouraging – albeit that the majority of SMMEs still operate in the informal space. The statistics are collected on a quarterly basis and the current figure is for 3rd quarter of 2022/23 financial year and therefore does not capture numbers from January 2023. This period has not been released yet.

(b)(i) Despite the fact that the DSBD does not have an instrument to quantify the number of established businesses in a given time, Seda is able to report their support for small, and medium enterprises as per the table below:

Province	No. of clients Supported	R Value of Support
Eastern Cape	21	R 2 571 935
Free State	374	R 1 383 606
Gauteng	103	R 1 224 186
KwaZulu Natal	311	R 4 431 613
Limpopo	77	R 971 346
Mpumalanga	222	R 995 462
North-West	35	R 375 560
Northern Cape	176	R 1 093 195
Western Cape	243	R 3 521 397

During the same period, 1 January 2023 to 30 September 2023, sefa was able to support SMMEs as per the tables below:

Number of SMMEs Financed 1 Jan 2023 to 30 Sept 2023
Eastern Cape	10 006
Free State	606
Gauteng	1 282
KwaZulu Natal	6 654
Limpopo	11 808
Mpumalanga	6 573
Northern Cape	77
North West	4 092
Western Cape	380
Unclassified	124
Total	41 602

sefa disbursed R1.37 billion to 41 602 SMMEs as follows:

Province	Number of SMMEs Financed	Amount Disbursed
Eastern Cape	10 006	R126 366 218
Free State	606	R20 504 421
Gauteng	1 282	R447 510 567
KwaZulu Natal	6 654	R261 820 491
Limpopo	11 808	R144 003 460
Mpumalanga	6 573	R138 369 180
Northern Cape	77	R10 148 996
North West	4 092	R51 907 193
Western Cape	380	R166 101 683
Unclassified	124	R2 309 605
Total	41 602	R1 369 041 814

(ii) This support was provided through various programmes. These include but is not limited to, the Manufacturing Support Programme, Supplier Development Programme, Empretec Programme, Export Development Programme, and the Women’s Enterprise Coaching Programme.

Seda’s service also extends to its Technology Programme, Incubation Programme and the Quality and Standards Programme.

Reply:

I have been advised that:

The Department of Small Business Development (DSBD) is planning to implement the SMMEs and Co-operatives Funding Policy in the 2024/25 financial year with a view to resolve the problems of red tape around access to funding by small-scale and informal businesses. The following are proposed interventions:

• To reduce the red tape on access to funding by small enterprises, the SMMEs and Co-operatives Funding Policy is proposing that the financiers must implement a simplified lending process by introducing common funding application form, standardised term sheet and business plan template. This will make the referral of misdirected funding applications seamless.
• That the funding institutions digitise their funding application processes to address the issue of prolonged lead times on funding applications, more especially in instances where capital is required on an urgent basis for working capital or purchase of raw material to service a contract.
• As part of financial literacy, the SMMEs and Co-operatives Funding Policy requires that the Business Development Service providers in South Africa institutionalise the practice of assisting SMMEs and Co-operatives with pre-funding support (compliance, directing small businesses to the relevant financiers, matching funding to business needs, etc.).
• The banks’ preferred collateral is not aligned to the asset composition of small enterprises which mainly consists of short-term (movable) assets in the form of inventories, receivables, insurance policy and cash deposits. To alleviate this challenge, the SMMEs and Co-operatives Funding Policy proposes that the DSBD develop an enabling legislation for the operation of the movable collateral registry in South Africa and to provide operational infrastructure for such a registry.

Reply:

I have been advised that:

The Department of Small Business Development (DSBD) capacitated the Small Enterprise Finance Agency (sefa) by transferring a total amount of R885 939 000.00 in the past 12 months (01 October 2022 to 30 September 2023) to continue the implementation of the Township and Rural Entrepreneurship Programme (TREP).

Date transferred	Amount
25-Nov-2023	R 238 313 000
24-Jan-2023	R 238 386 000
26-May-2023	R 181 884 000
30-Aug-2023	R 227 356 000
Total transferred	R885 939 000

The DSBD and its entity sefa are reviewing a number of moderations/improvements that if approved, will result in improved uptake of the TREP and a wider reach of targeted beneficiaries. These improvements include:

• Strategic Partnership / Joint Venture with the key industry players such as Masisizane Fund, African Bank, Lulalend, Standard Bank and other key intermediaries within the sefa Wholesale Lending portfolio. Forging partnerships with the key stakeholders to develop accessible and innovative solutions that addresses client challenges has a potential of ensuring that TREP makes a developmental impact in the economy.
• 18 District Co-ordinators employed in those districts where uptake of DSBD products is low to work together with the Small Enterprise Development Agency (Seda) in the districts to assist with building a sizeable pipeline for all DSBD offerings.
• Increase TREP resources – Five (5) interns responsible for pre-screening new applications and establishing initial contact with applicants were employed. Increasing the number of TREP resources will enable the programme to improve its performance by increasing the number of approvals, disbursements, and impact numbers. Employing more people on a commission basis across various access points and co-locations particularly the rural space.
• Basic assessment to be conducted upfront by Compliance in relation to Financial Intelligence Centre Act (FICA), PIP and ITC to ensure that we consider bankable deals.
• Reduction of TREP requirements for deals below R350 000 – the qualifying criteria is cumbersome for starts-up and informal businesses. It is therefore imperative to review the TREP requirements particularly for small and upcoming businesses. Basis of on lending is purely based on the financial viability and repayment ability but that is different for start-ups and businesses operating in townships hence we need to review some of the TREP requirements.

The current review process is looking at the administrative, logistical, financial and legal ramifications of each of the proposed improvements to avoid any comeback and delays once the revised programme hits the market. These proposals are looked at through a phased approach and timelines range from 01 June 2023 – 31 March 2024.

Reply:

I have been advised that:

a) The Department of Small Business Development (DSBD) has not undertaken an in-depth analysis of the potential job losses and economic dislocations caused by the failure of municipalities to pay service providers within the prescribed 30 days payment period.

However, the Department has prioritised the research and investigations to assess a broader structural impediment faced by Small, Medium and Micro Enterprises (SMMEs) and Co-operatives relating to:

• Access to finance.
• Non-financial support from Government and Private sector.
• Legal impediments to SMME and Co-operatives development; and
• Access to Markets.

In addition to the above and emanating from an investigation into regulatory impediment affecting SMMEs, DSBD is to engage with National Treasury on improving monitoring, reporting, enforcement and consequence management. National Treasury has set up an email, [email protected] for service providers to register complaints payments older than 30 days. DSBD is to increase awareness of this platform to SMMEs through its Red Tape Reduction Programme at the Provincial and Municipality levels. DSBD further intends to investigate the possibility of expanding the current Innovation Bridge Portal project to include a platform for registration of complaints on adherence to the 30-day payment period commitment of Government to SMMEs.

The Department has recently introduced the National Small Enterprise Amendment Bill to Parliament, which is currently out for Public Hearings, this Bill aims to remedy the lack of effective and affordable access to a justice mechanism for small enterprises in instances of business to business disputes or non-payment of enterprises on time. The establishment of an Ombud Service will bring justice in this instance for SMMEs without them incurring costs.

b) These are part of a holistic Research Agenda for the 3-year cycle (2023/2026) to advance the development, job creation and job preservation for those SMMEs and Co-operatives that are still battling under the current economic strains and loadshedding. It is expected that two (2) studies, (1) Sector Specific support: challenges and opportunities and (2) Market Access: Demand for Goods and services post Covid-19, will be completed by the end of the 2023/2024 financial year. These will provide the Department with the basis for evidence driven interventions to support SMMEs and Co-operatives.

The work on Red Tape Reduction with the Provincial and Local governments ongoing with Provincial Task Teams set in place to raise awareness on the Red Tape Reduction commitment made by the President to improve the operating environment of Government and its stakeholders. It is expected that these interventions and investigations will provide the Department with leverage to engage municipalities to address the issues of non-payment and other non-financial impediments faced by SMMEs and Co-operatives.

Reply:

I have been advised that:

(i) Department of Small Business Development (DSBD) annual reports for printed copies:

Financial Years	(a) Amount	(b) Suppliers	(c) Number of Copies
(aa) 2020-21	R128 495,25	Shereno Printers CC	10 copies printed (240 pages +4pp Cover A4 Report pages per copies)
(bb) 2021-22	R74 800,00	Talking Heads Advertising (PTY)	10 copies printed (204 pages +4pp Cover A4 Report pages per copies)
(cc) 2022-23	R74 800,00	Talking Heads Advertising (PTY)	Order issued and not yet paid. 10 copies printed (204 pages +4pp Cover A4 Report pages per copies)

Total Paid	R203 295.25
Total paid plus order issued not yet paid.	R278 095.25

(ii) Small Enterprise Development Agency (Seda)

Financial Years	(a) Amount	(b) Suppliers	(c) Number of Copies
(aa) 2020-21	R 84,318.00	Msomi Puisano t/a Msomi Africa	200 print copies (210*210mm)
(bb) 2021-22	R 59 850,00	Blackmoon Advertising	100 print copies (210*210mm)
(cc) 2022-23	R 69 500.00	Kashan Advertising	100 print copies (270*270mm)

Total Paid	R144 168.00
Awaiting the Service Provider’s invoice	R 69 500.00

(ii) Small Enterprise Finance Agency (sefa)

sefa did not print Annual Reports over the financial years, 2020/21, 2021/22 and 2022/23. sefa used the services of Yes Direct Pty Ltd in FY2020/21 and Interactive Web Works (IWW) CC during FY2021/22 and FY2022/23 to layout, edit and design the Annual Report and produce the final Annual Report in electronic format.

Financial Years	(a) Amount	(b) Suppliers	(c) Number of Copies
(aa) 2020-21	R344 736.33	Yes Direct Pty Ltd	None.
(bb) 2021-22	R324 656.50	Interactive Web Works (IWW) CC	None.
(cc) 2022-23	R123 061.00	Interactive Web Works (IWW) CC & EPI Creative (Pty) Ltd	None.

Total Paid	715 392.83
Awaiting service provider’s invoice	R77 061.50

Reply:

I have been advised that;

aThe key lessons learnt by the Department Small Business Development (DSBD) from the COVID-19 period in terms of its role in supporting informal businesses located in townships and rural areas can be categorised according to the needs of these businesses as short-term and long-term needs.

Short-term needs relate to the support that was required by informal businesses to recover from the impact of the COVID–19 pandemic and related lockdown measures which are:

1. Financial support – more than half of informal business owners indicated that they were in need of financial support just to be able to remain in business.
2. Support with marketing and customer acquisition – a large number of informal businesses sought ways to market their businesses and to increase their customer base under the prevailing circumstances.
3. Help to comply with hygiene standards – many of the businesses were looking for ways to keep their businesses safe and hygienic and to comply with the COVID-19 regulations.
4. Mentoring and training – some of the informal businesses that received support also requested to receive ongoing mentoring and further training.

Formal businesses during the COVID-19 pandemic were more likely to receive support from Government programmes while entrepreneurs in the informal economy relied mainly on Social Grants. Long-term needs indicated to us as the DSBD that the COVID-19 pandemic has opened multiple opportunities to strengthen informal and micro businesses in the long term in the following areas:

1. Use of digital channels and technology – many informal businesses see potential in the use of social media for marketing but the high cost of data remains the leading obstacle.
2. Collaboration with peers and more established organisations – many would like to sell products or services to more established businesses while others feel they will benefit from introductions and advice on how to work with them.
3. Transitioning from the informal to the formal economy – many would register their informal businesses if it helped them to access funding and grow their customer base.
4. Improve overall infrastructure and create an enabling environment – a number of informal businesses reported poor access to basic infrastructure while others reported challenges with authorities around places where they operate their informal businesses.

b) The COVID-19 pandemic has opened multiple opportunities to strengthen informal businesses in the long run. The Department continues to address the lessons learnt through its current programmes and by developing appropriate responsive interventions within the Small Business Development Portfolio (DSBD, Small Enterprise Development Agency and Small Enterprise Finance Agency) and through partnerships.

1. The Department of Small Business Development designated the informal business sector as a significant contributor to the country’s gross domestic product (GDP), employment creation, sustainable livelihoods and local economic development in the country. The National Informal Business Upliftment Strategy (NIBUS) was developed as a responsive strategy to this position. The Strategy is aimed at supporting informal businesses, which are mostly based in township and rural areas, to ensure that they become part of the economic mainstream of the country and to receive all the necessary support to ensure their growth and well-being.
2. The Informal and Micro Enterprise Development Programme (IMEDP), Shared Economic Infrastructure Facility (SEIF), Township and Rural Entrepreneurship Programme (TREP) and others are instruments of the Department that were developed as part of the Strategy continue to play a role in dealing with current challenges faced by informal businesses and in achieving the objectives of government where support to informal businesses is being prioritised. The instruments of the DSBD together with its programmatic interventions as implemented by the DSBD and its entities, Seda (non-financial support) and sefa (financial support) will continue to be positioned and used as interventions to ensure that the DSBD will always be in a position to assist informal businesses during natural disasters and at all other times.

Reply:

I have been advised that:

a) The following is an account of the interventions by the Department of Small Business Development (DSBD):

Trainings and workshops were provided in rural areas to 109 and 323 in the financial years 2023/24 (quarter 1) and 2022/23 respectively to co-operatives as part of non-financial support. The workshops focused on awareness campaign on the Co-operatives Development Support Programme (CDSP) and training on cooperative governance.

In order to popularise the CSDP, the Directorate plans to organise/facilitate/host a number of awareness /outreach campaigns across the nine provinces of the country. These campaigns also provide a platform for other stakeholders to make presentations on their product offerings, contributing to non-financial support. The table (attached as Annexure A) illustrates number of co-operatives attended presentation per province.

The implementation of amended CDSP guideline by the Small Enterprise Development Agency (Seda) increase financial support of co-operatives. With implementation gaining momentum, indeed more resources will be invested.

b) The DSBD, together with its agencies, Seda and the Small Enterprise Finance Agency (sefa), seek to assist co-operatives enterprises financially and non-financially. Seda, moving forward will be the lead Department for the implementation of CSDP, a financial support programme of the DSBD with an objective to support co-operative enterprises. Before CDSP was implemented through the agency, there was a Co-operative Incentive Scheme (CIS) that was managed at the Departmental and the approach was 90/10 to 100% grant then. Currently CDSP is administered by sefa as a blended finance of 70% (Grant) and 30% (Loan) for the past two financial years (2020/21 and 2021/22 financial years). To date no disbursement has been made due to sefa application process and requirements e.g., verification of members credit records, FICA documents etc.

In partnership with Seda, the CDSP programme to offer support to various categories to eligible co-operatives. Currently funding is limited to R2,500,000 (across the various categories). CDSP guideline has since been amended and the following are the proposed funding components to the various categories:

1. Category A: Start-up Co-operatives: Maximum funding of R1 500 000 per applicant.
2. Category B: Expansion Co-operatives: Maximum funding of R2 500 000 per applicant.
3. Category C: Secondary/Cluster Co-operatives: R5 000 000 per applicant.

The implementation of amended CDSP guideline by Seda increase financial support of co-operatives. With implementation gaining momentum, indeed more resources will be invested.

Reply:

My Hometown is Mthatha, in the King Sabata Dalindyebo Municipality, since the 1st August 2021 I have been advised that;

The Small Enterprise Finance Agency (sefa) funded 5901 Small Micro and Medium Enterprises (SMMEs) in King Sabata Dalindyebo Municipality (KSD) to the value of R79.5 million. This financial support helped create and sustain 4963 jobs. In terms of developmental impact, sefa’s disbursements to businesses owned by black entrepreneurs were R79.5 million, women-owned businesses received disbursements to the value of R28.5 million, the youth owned businesses received R19.5 million in disbursements and those based in the rural areas received R49.5 million over the same period. And this covers small business in both Mqanduli and Mthatha my hometown.

The Small Enterprise Development Agency (Seda) service delivery is geared on a provincial focus with District Municipalities as it’s networks for reach and access of services. From 2021 when I was appointed as the Minister of the Department of Small Business Development (DSBD) to date, Seda Eastern Cape (EC) supported 8516 SMMEs and Co-operatives of which 1706 are residents of OR Tambo District Municipality. These numbers pertain to non-financial support provided to SMMEs and Co-operatives by Seda EC and exclude support provided by various other ecosystem stakeholders.

Seda’s impact is not only based in the Minister’s hometown but rather regional. For the 2023 financial year in the Eastern Cape, the Seda Technology Programme currently supports fourteen (14) Incubators in the Eastern Cape. Twenty-seven (27) clients were funded through the Technology Transfer Assistance Programme at a total cost of R14 296 665.00. Furthermore, five (5) clients were supported with quality and standards interventions at a total cost of R237 103.97.

Annexure 1

The attached annexure illustrates Seda’s financial and non-financial support in the Eastern Cape Province:

Seda Eastern Cape clients

Newly Approved Incubators

Quality and Standards Beneficiaries

Technology Transfer Assistance Beneficiaries

Reply:

The Department of Small Business Development and its agencies, Small Enterprise Development Agency (Seda) and Small Enterprise Finance Agency (sefa), from time to time participate in Municipal LED Forums organised by the Municipalities in various Provinces across the Country. This includes Business Forums, Imbizos, Summits / Conferences, Community Outreach Programmes as well as Road Shows. The DSBD uses these platforms to share information regarding the services that are available to SMMEs and Co-operatives. The Department also utilises Seda and sefa offices across the country to share information regarding the services of the Department and its agencies.

Furthermore, and in line with the District Development Model (DDM), the Department had in the past financial year assigned senior and middle managers, from Acting Deputy Directors-General to Deputy Directors to all districts and provinces to act as both the provincial and district champions wherein they ensure continuous engagement with districts and municipalities to expose and enable SMMEs to access the services and programmes of the Department. The Department has taken this further by bringing in personnel, additional to the establishment, to link with the districts directly to take forward the work of DDM.

Reply:

I have been advised that:

A planned post-investment exercise by the Department of Small Business Development (DSBD) will be undertaken once all the planned handovers for the targeted districts have been concluded. This approach allows for a more comprehensive undertaking that begins to direct government efforts towards Provincial, District and Local Development Plans for the inclusion of supported beneficiaries.

This activity will be tied to programme assessment and the enhancement of the instruments that we develop in response to needs as identified by beneficiaries.

Assessments and post-investment monitoring will be conducted in the Eastern Cape by the department and Seda from the second quarter of the current financial year.

Reply:

I have been advised:

(a)&(b) That the Department of Small Business Development (DSBD) has considered the potential impact of the sectoral determinations that may be made by the Minister of Employment and Labour. The understanding is that the determinations will be made in consultation with the relevant sectors and emphasis is placed on the determinations being focused on the employment of suitably qualified candidates. The consultation process will enable the sectors to contribute to the determinations and raise any issues that may affect the sectors adversely. Thus, the determinations will not be a unilateral decision by the Minister, but a decision based on a well consulted process. Moreover, designated employers will be provided an opportunity to submit representations to the Director-General and the Labour Court should they not be able to meet the set numerical goals and targets before any fine is imposed, as set out in the Regulations.

It is DSBD’s considered view that the conceptualisation of the sectoral determinations is not based on unreasonably changing the racial composition of workforces but ensuring the equitable representation of different races. It is not envisaged that small businesses will be negatively affected by the regulations, as any issues that may have an adverse impact on their competitiveness and viability will be considered, fairly.

It should also be noted that Small Businesses that employ less than 50 employees will be excluded from submitting annual EE reports to the Department of Employment and Labour. Therefore, Small Businesses are not affected by the sector EE targets.

Reply:

I have been advised that:

a) In order to take steps towards reducing the regulatory impediments for SMMEs and Co-operatives, the DSBD in partnership with key stakeholders like South African Local Government Association (SALGA), the Department of Trade Industry and Competition (the dtic), Foundations and Think Tanks embarked on the following processes:

1. Conducted extensive research and rapid literature review to- identify key regulatory impediments, analyse them and design best methods and interventions, as well as strategies that could be adopted to address those impediments.
2. Through this research, the DSBD has identified 29 major regulatory barriers that this project will focus on the implementation of specific remedies, options, and reforms at National, Provincial and Local levels of government in the coming financial years.
3. The findings of the research have been piloted in selected municipalities to test their efficacy.
4. These findings were also used as a resource to support the work of the Red Tape Reduction Committee at the Presidency.

b) In the 2021-22 financial year period the DSBD started the process of reviewing the Businesses Act (No.71) of 1991 and the Licensing of Business Bill 2013 and will be introducing the Businesses Amendment Bill to Cabinet in the second quarter.

Reply:

I have been advised:

The Department of Small Business Development (DSBD) has not undertaken a review as part of its research undertaking on the African Growth and Opportunity Act (AGOA).

The DSBD and the Department of Trade Industry and Competition (the dtic) participated in the South Africa-United States of America (SA-USA) meeting to discuss matters related to the AGOA. The US International Trade Commission (USITC) communicated that they will be conducting assessment on how (extent to which and the impact of) AGOA has assisted/supported growth in the Chemical and Textile Sectors (and other sectors); as well as domestic programmes (funding and capacity building) aimed at supporting Small and Medium-sized Enterprises (SMME) exporters.

AGOA is currently set to expire in 2025. SA is jointly with the African Union lobbying for extension beyond 2025. DSBD and the dtic will embark on a consultation process to formulate a country position on AGOA ahead of the negotiations to ensure that South African SMMEs interests are covered in the new agreement.

(a)&(b) Not applicable.

Reply:

I have been advised:

(a)&(b) That During the 2022-23 financial year, the Department of Small Business Development (DSBD) developed the Gender, Youth and Disability (GEYODI) Strategy. The strategy was developed in consultation with stakeholders in the gender, youth and persons with disabilities ecosystem. The aim of the strategy is to mainstream women and youth participation in the mainstream economy. One of the objectives of this strategy is “to provide entry points for increased inclusion of women, youth and persons with disabilities into all SMME, co-operatives and informal businesses financial and non-financial interventions.” The GEYODI strategy is aligned with the revised 2019-24 Medium-Term Strategic Framework (MTSF) of minimum 40% target for women, 30% for youth and 7% for persons with disabilities in all programmes and interventions of the Small Business Development (SBD) Portfolio (the DSBD, the Small Enterprise Development Agency [Seda] and the Small Enterprise Finance Agency [sefa]).

 

Furthermore, the DSBD through Seda is administering the SheTradesZA Hub whose aim is to assist South African women entrepreneurs to increase their competitiveness and connect to regional, and global market. Some of the results that can be observed include the increase in jobs created and the increase in sales revenue.

The Department is collaborating with other stakeholders to transform the retail sector by ensuring that women entrepreneurs get opportunities to place their products on the shelves of major retails domestically and internationally. For example, we have major retails like Pick n Pay and Clicks stores that have listed some of the products from our beneficiaries.

The localisation programme that is the Small Enterprise Manufacturing Support Programme (SEMSP) programme has supported women entrepreneurs to commercialise their products in order to meet industry standard and quality.

The SBD Portfolio is supporting the Presidential 40% commitment – Women Economic Assembly (WECONA) by facilitating capacity building of women entrepreneurs to equip them to take up opportunities through government procurement processes. To date Seda has supported and trained more than 3000 women entrepreneurs from across the country through capacity building workshops.

The DSBD is also supporting women and youth who are operating in the informal sector through the Informal and Micro Enterprise Development Programme (IMEDP). The aim of the IMEDP is to empower informal businesses by allocating tools of trade to the value of R10 000 in order to build their asset base. These informal businesses are given an opportunity to formalise their businesses and participate in the mainstream economy. In the last financial year 2022/23 we have supported approximately 2500 women, youth and people with disabilities.

The Department is also rolling out the Youth Challenge Fund (YCF) whose purpose is to stimulate innovation amongst youth owned businesses. The primary objective of the programme is to provide the necessary financial support through sefa’s 50/50% blended finance and non-financial support through Seda’s Business Development Support service (BDS) to youth start-ups to promote innovation and enable them to acquire digital capability for competitiveness and viability. The Youth Challenge Fund seeks to provide financial and non-financial support to young entrepreneurs.

The following is a breakdown of financial support for women and youth during the 2022-23 Financial Year:

Measure	Annual Target	Q1 Achieved	Q2 Achieved	Q3 Achieved	Q4 Achieved	Year-to-date Achieved	% Achieved per annual target
Facilities disbursed to women-owned businesses	R801 million	R195 million	R212 million	R268 million	R253 million	R928.7 million	116%
Facilities disbursed to youth-owned enterprises	R601 million	R128 million	R157 million	R149.6 million	R130 million	R566 million	94%

Reply:

I have been advised:

That the Department of Small Business Development (DSBD) is implementing the Township and Rural Entrepreneurship Programme (TREP) to foster an entrepreneurial ecosystem in rural and township communities. The TREP goal is to overcome the legacy of economic exclusion by creating a conducive environment for entrepreneurial activity and providing dedicated business support to enterprises in rural and township areas including access to funding. TREP supports all small enterprises operating in townships and rural areas to grow their businesses. The programme assists small enterprises with the acquisition of business-related equipment, tools or machinery and working capital. Furthermore, the DSBD is rolling out a network of incubators to ensure that Business Development Support is accessible to small enterprises and co-operatives operating in unserved and underserved areas such as townships and rural area.

Our financial products through Sefa also prioritise rural enterprises as seen in the Sefa disbursements below:

	Audited Performance over the past financial years
	2019/20	2020/21	2021/22	2022/23 (Estimated)	2023/24 (Target)
Disbursements to enterprises located in rural towns and villages (R’000)	R371 151	R563 051	R977 100	R766 765	R938 636

Reply:

I have been advised that:

a) As means of addressing the onerous labour legislation and regulations to free up small businesses to create jobs, the Department of Small Business Development (DSBD) has activated several interventions which include, undertaking a dedicated exercise to identify and review legislation and reforms that impede on Small, Micro and Medium Enterprises (SMMEs) and co-operatives’ growth. The update has so far embarked on the initial process of consultations focused on the primary users of this legislation namely, municipalities who are the sphere of government that must implement business licensing by-laws. A total of 29 pieces of regulatory impediment legislations have been identified across the three spheres of government that will culminate with a clear implementation and action plans for action. This exercise was conducted in partnership with key stakeholders in the ecosystem. These stakeholders include but not limited to the following:

• Departments of Economic Development across all nine (9) provinces.
• South African Local Government Association (SALGA).
• The Social Protection Community and Human Development Cluster.
• Department of Cooperative Governance and Traditional Affairs (COGTA).
• Department of Home Affairs.
• Districts and local municipalities.

The DSBD is also implementing the initiatives that are also aimed at lessening regulatory barriers for SMMEs and co-operatives which the Pilot Administrative Simplification Programme (PASP) and Municipal Performance Monitoring. The program aims to ease the strain that prolonged processing delays have on businesses and public resources. Administrative simplicity will help with process improvement at municipality level. The initiative entails exposing the municipality stakeholders and users to a five (5) days’ workshop for optimisation of processes. Some of the municipalities that have already benefitted from this initiative include amongst others, the Ray Nkonyeni (Ugu District), Ubuhlebezwe (Harry Gwala District), and the City of Umhlathuze Local Municipalities (King Cetshwayo District). The Department is also:

• In the process of developing a Municipal Red-tape-Reduction Dashboard which will support Municipalities to track all the administrative bottlenecks for urgent attention.
• Rolling out the Red Tape Reduction Awareness workshops whose purpose is to create awareness and instil the culture of intolerance towards red tape. A total of twenty-five (25) municipalities have already participated in these workshops during the 2022-23 financial year.
• Hosting the Inter-Provincial Task Team (IPTT) on red tape reduction and ease of doing business. The IPTT is a quarterly platform for the DSBD, Provincial Departments of Economic Development, COGTA, Red-Tape Reduction Committee at the Presidency, key entities to SALGA to identify and discuss approaches to address systematic red tape issues that impacts SMMEs / co-operatives. This platform is also utilised to exchange best practices, foster peer learning, and build a community of best practice, this session is hosted quarterly. As a result, important sectoral problems for action are escalated for action. So far, about sixteen (16) IPTT meetings and workshops were held during. Some of the successes of the IPTT include amongst others, addressing bottleneck in the National Department of Transport policies of clearing the backlog in the tourism operating license applications. Over two hundred and twenty-seven (227) renewals have been processed.

b) The DSBD has already started an in-depth review of the regulatory barriers affecting small enterprises and the urgent need for regulatory change regarding the Businesses Act of 1991 and the Licensing of Business Bill. The Department has, so far, determined that there are twenty nine regulatory impediments that need to be addressed at the national, provincial, and local levels of government in the upcoming fiscal years. This project will concentrate on implementing these specific remedies, options, and reforms across the three spheres of government. The Businesses Amendment Bill that addresses some of the regulatory impediments will be presented to Parliament during the current financial year (2023-24). After the review of the twenty nine regulatory impediments the an implementation plan will be developed and presented to Cabinet after consultations have been finalised with the affected institutions by the end of the current financial year.

Reply:

I have been advised that:

The table below outlines the Small Enterprise Finance Agency (sefa) loan book performance in the referenced years:

Financial Year	Approvals	Disbursements	# of SMMEs Financed	# of Jobs Facilitated
FY2016/17 (Audited numbers)	R827 million	R1, 076 billion	43 211	55 997
FY2022/23 (un-audited numbers)	R1, 706 billion	R2, 427 billion	74 762	104 547

So, it is clear that Sefa has not regressed – infact it has more than doubled its disbursements from 2016/17 to 2022/23 . To break down this further and for the financial year ending 31 March 2023, the Minister indicated in her budget speech that sefa through its development finance interventions and programmes, cumulatively financed 74 762 SMMEs and Co-operatives and disbursed R2.4 billion to these enterprises.

Through these disbursements, sefa was able to reach:

• 74 486 black owned SMMEs to the value of R2.1 billion.

• 15 535 youth owned SMMEs to the value of R564 million.

• 72 651 women owned SMMEs to the value of R928 million.

• 2 953 township based SMMEs to the value of R541 million.

• 66 302 rural-based SMMEs to the value of R952 million.

Collectively, these funding interventions have created 32 665 new jobs and sustained 71 882 existing jobs.

This performance is by no means reflecting a regress in the performance of sefa at the end of the financial year ending in 31 March 2023.

Reply:

I have been advised:

That the Small Enterprise Development Agency (Seda) has a wide footprint in the country that consists of fifty-three (53) branches and fifty-six (56) co-location points with the intention to widen access to Seda services in underserviced and rural South Africa. The Small Enterprise Finance Agency (sefa) is working with Seda in increasing awareness across various regions by deploying additional resource in Seda’s access points as well as co-locations. This will assist in addressing the issue of SMMEs travelling far to access Seda services. A Business Development Services mapping exercise has been undertaken to identify other stakeholders that are also providing similar services to establish partnerships with them and offer services on the entity’s behalf. Furthermore, to broaden the net wider, the use of virtual platforms is considered as an opportunity where Seda provides interaction opportunities for clients to attend online training and webinars. Seda has adjudicated seventy-eight (78) and signed contracts with fifty-two (52) access points during the 2022-23 financial year as shown below. Eighty (80) access points will be contracted by the end of the 1st quarter of the 2023/24 financial year.

Seda will continue to expand service delivery to rural communities through various modalities whilst striking a sound balance between community needs, budget availability and collaboration with ecosystem partners.

During the 2022-23 financial year, Seda has reached 68 117 SMMEs and Co-operatives through entrepreneurship awareness sessions throughout the country. Pop-Up Markets that are hosted in collaboration with our strategic partners also assist to raise awareness and promote the services and benefits offered by Seda. Seda organised 39 Pop-Up markets in 2022-23 financial year. Following are a few recent examples:

• Seda Namakwa branch conducted their Pop-Up market from 28 February 2023 to 1 March 2023 where various clients exhibited their products and services. Eighteen (18) exhibitors were in attendance.
• Seda ZF Mgcawu branch hosted the Pop-Up Market from on 2-3 March 2023 in Upington.
• The Nkangala Branch held a Pop-up market on 17 March 2023, in Delmas, and twenty-five (25) SMMEs exhibited their products and services in partnership with Victor Khanye Local Municipality and Standard Bank.
• Seda Limpopo hosted a Pop-Up market in collaboration with the Groblersdal Mall in February 2023.
• The Mopani Branch in conjunction with the district and local municipalities hosted two (2) Pop-up markets and one (1) in Waterberg on 31 March 2023.
• Small Business Development Portfolio (DSBD, Seda and sefa), in collaboration with Exxaro, hosted a three-day mall activation at Lephalale Mall, Limpopo, from 24-26 March 2023. Twenty-two (22) local entrepreneurs from the manufacturing, arts and craft, agriculture, and service sector participated in the exhibition.
• Pop-Up markets were held in the Brits Mall with ten (10) SMMEs and Letlhabile Mall with fifteen (15) SMMEs exhibiting. Both events were held on the 31 March 2023 and ending on 1 April 2023.

During the 2022/23 financial year, Seda trained more than fifteen thousand one hundred and nineteen (15,119) SMMEs on various programmes and courses. These includes courses amongst many other Basic Business Skills, Business Start-Up 1, Cybercrimes, Hazard Analysis Critical Control Point (HACCP) Awareness, Food Safety, Quality Management System (QMS), SARS Incentives, Export Awareness, Costing, Empretec, Business Planning, Business Model Canvas, Community Public Private Partnership, Art of Pitching, Customer Care, Retail Management, Design Thinking, Green Economy, etc. Training are needs based and often presented in collaboration with our partners. Below are a few examples:

• The Seda ZFM branch conducted a 3-day Farm management training with small scale farmers in the small-town agricultural town of Keimos. The training helped by upskilling them on the management activities and responsibilities involved in running an agri-business. Basic activities involved in the agri-management process were explained by providing examples and scenarios.
• Seda Thabo Mofutsanyana Branch partnered with the Department of Correctional Services with the aim of developing a capacity program for inmates based in Bethlehem prison. The Provincial Regional Facilitator conducted self-mastery training attended by twenty-seven (27) inmates over 3 days.
• Free State Department of Economic, Small Business Development, Tourism and Environmental Affairs (DESTEA) in partnership with the Motheo TVET College hosted a Financial Symposium on 8 March 2023 in Bloemfontein. The Seda Provincial Office and Mangaung Branch, together with sefa, attended the session with other stakeholders namely, Nedbank, NEF, and the Department of Trade Industry and Competition (the dtic) to present offerings to the audience. Ten (10) Seda clients from the district exhibited their products and services.
• Seda Joburg Branch collaborated with EkasiLab from the Innovation Hub to roll out design clinic training in Soweto and Kagiso for approximately thirty (30) Small Businesses. Seda covered the cost of training and EkasiLab provided venues and catering.
• Seda Gert Sibande Branch has partnered with Coca-Cola to train fifteen (15) businesses. The training took place in February 2023. Coca-Cola offers a three(3)-meter container valued at R150 000 and a Fridge to the Spaza Shops in rural and township areas.
• The Innovation and Technology unit of the the dtic, DSBD in partnership with Seda Thabo Mofutsanyana Branch invited prospective entrepreneurs with innovative ideas from Setsoto and Dihlabeng Local Municipalities to attend the innovation workshop. The workshop was held in Bethlehem and Ficksburg (Ntsu Secondary School, Comp High School, Seda Bethlehem office and Ficksburg hall) from 14-15 March 2023. The purpose of the workshops was to unearth technologies from the communities and townships of the district, create networking platforms for technology development and commercialisation and present technology offerings of the the dtic. More than a hundred (100) participants attended the session in four (4) different venues including two high schools in Bethlehem.

Seda has an Export Orientation Course (EOC) which focuses on Export Development. These courses focus on the business with the aim of helping the business assess its export readiness. The training targets SMMEs that have the intention and the potential to enter the export business or those already involved in exports but wanted to strengthen their knowledge in this field of business.

The SheTrades programme is a partnership between the International Trade Centre (ITC), DSBD and Seda to promote Women’s Entrepreneurship. ITC SheTrades has set up a Hub in South Africa to help South African women entrepreneurs increase their international competitiveness and connect to national, regional, and global markets through the SheTradesZA Hub. The primary objective of the Hub is to connect at least 10 000 women owned businesses to markets by 2024. This is part of South Africa’s contribution to ITC's goal of connecting three million women entrepreneurs to markets by 2023.

A total of 3003 women have registered as at the end of March 2023. Through the programme, women-owned businesses will be able to:

• Connect to potential buyers, investors, suppliers, business support organizations and SheTrades partners.
• Learn skills to boost business potential through free e-learning courses, on-site workshops, and webinars.
• Receive support to attend national, regional, and international trade fairs.
• Get chances to participate in B2B meetings.
• Access to investment opportunities.
• Increased visibility and larger network in international markets.

Seda has also forged three key skills development partnerships namely:

• A 3-year partnership with the National Skills Fund (NSF) to benefit 14 000 beneficiaries for a total budget of R 592 275 000. The aim of the project is to recruit unemployed graduates with Accounting and Business Management qualifications to be trained on New Venture Creation, Coaching, and Mentorship Programme to enhance their skills to provide support to Micro Enterprises. Seda will use coaching as an innovative methodology to facilitate and reinforce learning and development support to Micro Enterprises and the unemployed graduates will be trained on new venture creation as well as business coaching to enable them to transfer skills & knowledge to Micro Enterprise owners.
• Seda and W&R Seta signed an agreement to support one thousand (1000) Tuckshops, General Dealers to the value of R 9 975 000.
• In 2021, DSBD, Seda and Merseta signed Agreement for Merseta to release a discretionary grant to Seda to the value of R 50 million. The funding will be provided in phased approach over a 3-year period. The purpose is to train Small Enterprise in the Automotive Trade Sector as well as facilitate Artisan Recognition of Prior Learning (ARPL).

In addition to the above, Seda through its Learning Academy has also developed different training programmes. These programmes are credit bearing and accredited by the Services Seta. Quality training aims to assist organisations of all types to implement and operate the QMS to increase effectiveness, consistency, and customer satisfaction, explain the benefits of implementing QMS and understand the quality, management principles. Whilst Food safety introduces Food Safety, Understand Pre-Requisite programme, HACCP and HACCP principles and Implementing a Food Safety Management System (SANS 22000:2019.).

Seda has an Entrepreneurship in Schools Programme that encourages learners to consider entrepreneurship as an alternative career to employment. The main objective of the programme is:

• To influence the mindset of learners by encouraging them to become job creators instead of job seekers once they leave the schooling system.
• To equip learners with entrepreneurial knowledge and skills needed to start and manage their businesses; and
• To improve entrepreneurial activity amongst the learners and educators.

Seda is also in partnership with the United Nations Conference on Trade & Development’s (UNCTAD)

Division of Investment and Enterprise United Nation’s Empretec training Programme.

• Empretec is a six (6) day programme aimed based on a unique Harvard University methodology focusing on behavioural approach to entrepreneurship.
• The programme is interactive, experience and self-assessment based and takes 25-30 participants per workshop. Participants learn by doing.
• Participants on this programme receive an UNCTAD endorsed certificate.
• Programme develops Personal Entrepreneurial Competencies (PECs) such as opportunity seeking, persistence, goal setting, risk taking, fulfilling commitments, planning etc. for participants.

Seda has a dedicated programme, The Basic Entrepreneurship Skills Development (BESD) which was jointly developed by Seda and German Federal Ministry for Economic Cooperation and Development via Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) since 2012. GIZ left the programme in December 2016. The programme is funded by the National Skills Fund for an amount of R84 million. The BESD approach utilises coaching as an innovative methodology to facilitate and reinforce learning and development support to emerging entrepreneurs. A total of 260 undergraduates and 1998 Emerging Entrepreneurs successfully completed the training initiative.

Reply:

1. The department acknowledges the impact of load shedding across country which has led to some SMMEs closing down their operations while others decline in performance. The Small Enterprise Agency (sefa) conducted a dipstick survey on SMME’s it has funded to try and understand the impact of loadshedding on their operations. From the results of the survey, there was no client that indicated that they closed their doors permanently due to loadshedding. However, businesses showed that they experienced adverse effect of loadshedding on their businesses. Many clients, especially those in the manufacturing sector indicated that they are losing production while others have lost revenue.

2. The standard procedure followed when designing funding instruments is to conduct research to understand what else is offered in the market for an example, in designing the latest loadshedding relief scheme (Power Purchase Products), offerings from the Department of Trade Industry and Competition (the dtic) – through the National Empowerment Fund (NEF), Department of Mineral

3. Resources (DMRE), Department of Forestry, Fisheries and the Environment (DFFE), and National Treasury were consulted. Furthermore, the relevant industry bodies and/or business formations such as Council for Scientific and Industrial Research (CSIR), Technology Innovation Agency (TIA) were consulted in order to design products that are needs based. The meetings normally take place virtually, so the recordings of these meetings are kept as evidence of these consultations.

Generally for other instruments the Department does conduct site visits to engage with the affected enterprises for example when the provinces of KwaZulu Natal and Eastern Cape were affected by loadshedding as the Minister together with officials we visited the SMMEs to see and also find out directly from them what kind of support they require for them to recover and get back to operation. Also the Provincial Roadshows which we hosted across the country in the last financial year played a very critical role in relooking at the existing instruments and adjusting them to fit with the needs of small enterprises. The Roadshows reports were recorded and are kept in the Department.

Reply:

I have been advised as follows:

That the interest rates between the Micro Finance Institutions (MFIs) and their clients are governed by the National Credit Act (NCA). All the Small Enterprise Finance Agency (sefa) funded MFIs charge interest rate that is within the rates prescribed by the NCA. However, both the clients and sefa acknowledge that the current rates are higher than what would be preferable, and sefa and its developmental clients are in the process of developing a sustainable way forward on rates and charges that bears in mind the MFIs’ need to be financially sustainable and the entrepreneurs’ need of finance at the best possible rates.

Reply:

I have been advised as follows:

a) As at 30 April 2023, the total outstanding Spaza Shops Support Programme (SSSP) beneficiaries who had not yet received the additional R7 000 grant were 504 nationally. During the month of May 2023, 426 beneficiaries of SSSP received their additional R7 000, and this has been confirmed with Nedbank. This means that to date only 78 beneficiaries are yet to receive their additional R7000 grant and the process to disburse these funds is underway.

b) Provincial breakdown of SSSP performance

Spaza Shop Support Programme Provincial budget allocation
Province	SPAZAS & General Dealers Per Province	Budget Rands	No . of approvals R3500	No . of approvals R10500	No. of top ups R7000	Amount committed to Spazas (R)	Budget balance (R)
Total EC	3 200	11 222 445	716	44	662	7 602 000	3 620 445
Total FS	1 430	5 015 030	232	107	205	3 370 500	1 644 530
Total GP	5 370	18 832 665	322	375	299	7 157 500	11 675 165
Total KZN	5 000	17 535 070	2473	269	2256	27 272 000	- 9 736 930
Total LP	2 690	9 433 868	1224	121	1125	13 429 500	- 3 995 632
Total MP	2 110	7 399 800	197	71	157	2 534 000	4 865 800
Total NC	840	2 945 892	72	48	70	1 246 000	1 699 892
Total NW	1 840	6 452 906	105	30	88	1 298 500	5 154 406
Total WC	2 470	8 662 325	99	55	74	1 442 000	7 220 325
TOTAL	24 950	87 500 000	5 440	1 120	4 936	65 352 000	22 148 000

It should be noted that the 426 beneficiaries that received the additional R7 000 in May 2023 are yet to be added to sefaLAS (sefa’s loan electronic system). The system periodically runs updates and the updated information should be available by mid-June 2023.

Reply:

I have been advised as follows:

1. The Industrial Development Corporation (IDC) is an agency under the Department of Trade, Industry and Competition (the dtic). The department has not been apprised of Industrial Development Corporation’s motive to move into the SMME wholesale lending.
2. As indicated under (1) above, the motive for the move is not known to DSBD. However, sefa has been delivering on its mandate. To date, since its establishment in April 2012, sefa has disbursed R9.5 billion into the South African economy via the Wholesale Lending channel, supporting 629 971 SMMEs and Co-operatives, who in turn helped create and sustain 767 551 jobs.
3. The DSBD is currently undertaking a process of merging sefa and Co-operative Banks Development Agency (CBDA) into the Small Business Development Agency (Seda). The establishment of the new entity will give effect to a Cabinet decision to enable and provide for integrated government support (both financial and non-financial) to small enterprises, which are defined as including Co-operatives.

Reply:

I am advised as follows:

The Small Enterprise Finance Agency (sefa) takes fraud and corruption seriously. There are various mechanisms and strategies developed by (sefa) to inwardly address potential risk of fraudulent activities. One of these is the anti-fraud hotline at sefa with contact number 0800 000 663. Instances where corruption and fraud has been reported Sefa has instituted investigations and will act on the recommendations where our officials might have been involved.

Reply:

I am advised follows:

The Department of Small Business Development (DSBD) has put together a loadshedding relief package called the Power Purchase Product (PPP) to be implemented through its agency Small Enterprise Finance Agency (sefa). The PPP is financial package which aims to assist small and medium enterprises across South Africa who have been severely impacted by loadshedding. The programme will support these enterprises with a blended loan facility of up to R1 million. An amount of R 490 million is allocated inclusive of Seda support to product markets. The blended facility will be utilised for the acquisition of alternative energy sources as well as related working capital.

As part of our medium to long term strategy, a separate request was submitted to the National Treasury to allow non-Banking Financial Institutions such as the Khula Credit Guarantee to participate in the Bounce Back Scheme so that funding support to enterprises can be maximised.

Reply:

a) I have been advised that the reversal in the payment was due to a difference of opinion, between Microsoft and the Department of Small Business Development, regarding the currency in which the payment needed to be made.

b) The Department made the payment to Microsoft in South African Rand, but Microsoft insisted on receiving the payment in US Dollars. The payment had to be reversed in order to make the payment in US dollars.

Reply:

I have been advised:

that the relationship between the Small Enterprise Development Agency (Seda), Small Enterprise Finance Agency (sefa) and the North-West Development Corporation (NWDC) is both strategic and complimentary.

Currently the NWDC does not provide funding to SMMEs in the province, they provide access to finance by linking SMMEs that require business funding with other Development Finance Institutions including, but not limited to, sefa. Additionally, NWDC also provides access to markets and access to industrial infrastructure to SMMEs funded through sefa.

Furthermore, the NWDC offers non-financial support only to the clients that it has previously facilitated access to finance for by linking them with DFIs. In essence the relationship with our agencies is a complementary relationship.

Reply:

(a)&(b) The collaboration between the Seda and sefa has also improved to the benefit of SMMEs and Co-operatives. One of the initiatives that was undertaken is the development of a common funding template. The funding template provides guidelines to Seda officials when developing business plans that are aimed at raising funding through sefa. In addition to this initiative, there is a Steering Committee that has been established at the national level to guide provinces in respect of areas of collaboration. Seda officials in all provinces were also trained on sefa’s programmes as well as the automated loan origination system.

In the short term, there are concerted efforts to strengthen and streamline collaboration and communications between the DSBD entities (sefa and Seda) with regards to their products, services and especially progress feedback on applications. To this end, the entities identified the following key focus areas of engagement to ensure improved service delivery to our clients:

• The sharing of databases by the entities in order to improve service offerings and efficiencies.
• Pre-investment support to be provided by Seda after sefa has reviewed an application and indicates what Seda needs to assist the client with.
• The sharing of processes, which will be arranged with the Seda provincial network through virtual sessions.
• Amendment of the referral process to focus on process and supported related issues.
• Exposure of Seda Practitioners to sefa processes to gain a better understanding of the entities’ evaluation processes.
• The training of Seda Business Advisors on sefa’s due diligence.
• sefa will also train Seda’s Access Points Service Providers on sefa’s products and application processes, especially in those areas where sefa never receives applications.
• Proper functioning referral system between the two entities.
• sefa to link its pre-invest staff to the various Seda branches.
• Seda will also provide post-investment support. sefa will still provide post-investment monitoring, as required of them as a Development Finance Institution (DFI).

In some of the provinces, sefa’s Investment Analysts are already linked to Seda branches and sefa’s Regional Managers meet with the relevant Seda Branch Managers and Practitioners to discuss sefa referrals. These engagements are very important, and the entities are working on standardizing it in all Provinces.

Reply:

(a)(i) The Small Enterprise Development Agency (Seda) has the following partnerships with Government Agencies

Training & Capacity Building –

• DHET – NSF Basic Entrepreneurial Skills Development
• MerSeta – skills development
• W&R Seta - skills development
• PSETA – skills development
• Stellenbosch University - hydroponics vegetable growing
• SALGA - collaboration at local government
• Seda, Entrepreneurial Planning Institute (EPI) & Institute of Business Advisors of South Africa
• (IBASA) Project on Capacity building of Business Advisors - re-grading Business Advisors

(a)(ii) Local Government

As part of the District Ecosystem Facilitation Model (DEF) implementation, which is linked to the District Development Model (DDM), Seda branches engaged with the following 9 district municipalities:

• Seda Western Cape has signed a tripartite agreement with the Department of Economic Development and Tourism (DEDAT) and the Garden Route District Municipality (GRDM). Work has been ongoing in terms of the agreement.
• Seda Northern Cape - Namakwa branch had engagements with local municipalities, Kangnas Windfarm, BTE Renewables, and Vedanta Resources. The Review of the John Taolo Gaetsewe (JTG) District “One Plan” was concluded and approved by the Council.
• Seda’s Gauteng, City of Tshwane branch had a meeting on the new agreement with the City of Tshwane was held in March 2023. The agreement is in the final stages of being signed and it was agreed that the rollout on the district model would be discussed at the first quarterly meeting.
• Seda’s North West, Ngaka Modiri Molema Branch is actively involved in the District Development Model led by the Ngaka Modiri Molema District Municipality and Cogta and participated in the DDM Economic Development Work-Stream Meetings. Ecosystem projects include the Mafikeng trade hub, the District SMME Expo as well as the initiative on beneficiation of Hemp (Cannabis).
• Seda Eastern Cape - An agreement was signed at the launch of Seda’s District SMME Coordinating Council (DSCC) in the Sarah Baartman District Municipality which continues to be championed by the Seda’s Gqeberha / Port Elizabeth Branch.
• Northern Cape, the Seda ZFM branch in Kuruman, conducted a 3-day Farm management training with small scale farmers in the small-town agricultural town of Keimos within the ZF Mgcawu District. The training helped by upskilling them on the management activities and responsibilities involved in running an agri-business. Basic activities involved in the agri-management process were explained by providing examples and scenarios.
• Free State, Seda Thabo Mofutsanyana Branch within the Thabo Mofutsanyane District partnered with the Department of Correctional Services with the aim of developing a capacity program for inmates based in Bethlehem prison. The Provincial Regional Facilitator conducted self-mastery training.
• Free State, DESTEA in partnership with the Motheo TVET College hosted a Financial Symposium on the which was Seda Provincial Office and Mangaung Branch attended the session together with other stakeholders namely, Nedbank, Sefa, NEF, and the DTI to present offerings to the audience.
• Gauteng, Seda Joburg Branch collaborated with EkasiLab from the Innovation Hub to roll out design clinic training in Soweto and Kagiso for approximately 30 Small Businesses.

In terms of government departments and agencies, Seda and sefa participates in various DDM initiatives that are driven by DSBD. This ensures that there is closer collaboration with local municipalities and other local structures.

(a)(iii) Private Sector Ecosystem Partners

Seda’s engagement with the private sector ecosystem partners in 7 provinces as indicated below:

Retail Motor Industry Organisation (RMI), Gauteng - The partnership provides small enterprise development services to black informal and semi formal businesses who are candidates of the National African Association for Automobile Services Providers (NAAASP). Seda’s role is to provide business development support whilst RMI’s is to provide technical training, facilitate accreditation and facilitate access to retail automotive value chain.

SAPPI, Mpumalanga - Seda’s role is to provide non-financial business development support to Enterprises/ Suppliers selected by Sappi whilst the latter identifies and select Enterprises/ Suppliers for development.

Gold One Mine, Gauteng - Gold One provides access to contracts and SDP opportunities to SMMEs. Seda is currently working with the mine on a Cooperative Initiative. This involves supporting five (5) Bakery Cooperatives, which are based in Ekurhuleni Municipality.

Kgodiso Development Fund, Northern Cape - Seda to provide business development support to Enterprises/Suppliers selected by Kgodiso. Kgodiso to identify and select Enterprises/Suppliers for development.

The South African Furniture Initiative (SAFI) Programme, Western Cape - SAFI has identified youth artisans for business development support. Seda subsequently trained several of the potential clients on Business Awareness. Seven (7) clients have indicated that they are interested in further Seda assistance and were assigned to Business Advisors. At present only one (1) client (Werwel Holdings) is actively working with Seda WC.

Shoprite - Exotic Taste, a City of Cape Town, Western Cape client, has signed a deal with to supply products under its private label programme. Seda Northern Cape, De Aar, for supplier development opportunities in areas where Shoprite operates within Pixley. Seda Free State and the Shoprite Group are working towards having a Supplier Development Programme for Seda clients in the province. This partnership kickstarted with the branches identifying those SMMEs who have the potential to join the programme.

Coca-Cola partnered with Seda Gert Sibande Branch in Mpumalanga to train fifteen (15) businesses. Coca-Cola offers a 3-meter container valued at R150 000 and a Fridge to the Spaza Shops in rural and township areas.

sefa direct Lending has a total of 20 strategic partner institutions. These partnerships range from public, private sector institutions as well as business chambers and associations. The partnerships are managed through MOU’s by a dedicated unit that is geared towards generating a quality pipeline for sefa.

(b) The support provided by Seda in Business Development Services (BDS) is assisting the small enterprises in the areas where there is agreement with the Local Government and the Private Sector.

Seda continuously reflects on how it wants to position itself and contribute meaningfully to the small business ecosystem and understand the importance of extending our services and offerings to SMMEs and Cooperatives. With limited resources, the Agency continues to leverage on strategic partnerships and programmes that will stimulate economic growth, improve small enterprise performance, productivity, long-term sustainability whilst creating entrepreneurship awareness in these areas.

Seda is also in partnership with the United Nations Conference on Trade & Development’s (UNCTAD) Division of Investment and Enterprise United Nation’s Empretec training Programme. Empretec is a six day programme aimed based on a unique Harvard University methodology focusing on behavioural approach to entrepreneurship. The programme is interactive, experience and self-assessment based and takes 25-30 participants per workshop. Participants learn by doing. Participants on this programme receive an UNCTAD endorsed certificate. Programme develops Personal Entrepreneurial Competencies (PECs) such as Opportunity Seeking, Persistence, Goal setting, risk taking, fulfilling commitments, planning etc. for participants.

Seda has a dedicated programme, the Basic Entrepreneurship Skills Development (BESD) which was jointly developed by Seda and German Federal Ministry for Economic Cooperation and Development via Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) since 2012. The programme is funded by the National Skills Fund for an amount of R84 million. The BESD approach utilises coaching as an innovative methodology to facilitate and reinforce learning and development support to emerging entrepreneurs.

The SheTrades programme is a partnership between the International Trade Centre (ITC), DSBD and Seda to promote Women’s Entrepreneurship. ITC SheTrades has set up a Hub in South Africa to help South African women entrepreneurs increase their international competitiveness and connect to national, regional, and global markets through the SheTradesZA Hub. The primary objective of the Hub is to connect at least 10 000 women owned businesses to markets by 2024. This is part of South Africa’s contribution to ITC's goal of connecting three million women entrepreneurs to markets by 2023. Through the programme, women-owned businesses will be able to:

• Connect to potential buyers, investors, suppliers, business support organizations and SheTrades partners.
• Learn skills to boost business potential through free e-learning courses, on-site workshops, and webinars.
• Receive support to attend national, regional, and international trade fairs.
• Get chances to participate in B2B meetings.
• Access to investment opportunities.
• Increased visibility and larger network in international markets.

A total of 3004 women have registered as at the end of March 2023.

The following table lists other key partnerships already formalised and in the process of being formalised:

Partner	Purpose
OR Tambo Co-operative Development Centre	Partnership with Coop centre on enterprise development. Seda to provide non-financial support services such as Business Plans, access to markets, and training whilst the Coop Development Centre provides access to their database and share defined resources with Seda.
Department of Economic Development and Tourism and Free State Development Corporation (FDC)	To Set-up of a Pop-up store for SMMEs in the Thabo Mofutsanyana district in Qwaqwa. Seda is to Manage the store. Department of Economic Development and Tourism and FDC to assist with monthly rental amount for a period of 12 months.
National Home Builders Registration Council (NHBRC)	Purpose: A partnership established due to a high demand of technical skills in the construction sector, particularly amongst disabled, youth & Women owned business based rural and Township areas. Seda Thabo Mofutsanyana Branch to recruit clients. NHBRC to provide training and manuals.
Gold One Mine	Purpose: Seda to provide non-financial support services such as Business Plans, Technology Transfer Funding and Marketing Support. Gold One to provide access to contracts and Supplier Development (SDP) opportunities for their suppliers.
Anglo American	Supply Development Programme (SDP) around Fetakgomo Tubatse under Mototolo and De-Brochen shafts jurisdiction. Parties collaborate for SMME Development in terms of co-funding projects in the area identified and agreed by both parties. Seda will facilitate non-financial support and Anglo will provide venue and funding for the client identified by both parties.
SFERA Training and Development	Partnering in the development of the Automotive sector, Agriculture, and ICT (Technical Specialist in Autobody Repairs accredited with all vehicle brands excluding BMW).
SIOC CDT Thabazimbi Hub	Appointed by Khumba Resources as the implementor of their Enterprise Supplier Development (ESD) and CSI in areas where the mine has closed to develop communities
SAPPI	Seda and Sappi intend to create a joint Enterprise / Supplier development programme. Seda to provide non-financial business development support to Enterprises / Suppliers selected by SAPPI. SAPPI to identify and select Enterprises / Suppliers for development
Columbus Steel and Gert Sibande District Municipality	The establishment of Virtual Incubation programme. Seda to provide non-financial services. Columbus Stainless Steel to provide technical support. Gert Sibande District will come with tools of trade.
Sishen Iron Ore Company (SOIC)	Seda to provide non-financial services support to SIOC contracted service providers as well as aspiring service providers. Parties to conduct joint outreach sessions. SOIC to refer client to Seda for the provision of non-financial support.
Kangnas Windfarm	Seda to provide post funding interventions for clients that received funding from Kangnas Windfarm.
Bojanala Platinum District Municipality	Memorandum of Agreement on Enterprise Development and Events Partnership
Rustenburg Local Municipality	Memorandum of Agreement on Enterprise Development and Events Partnership.
Moses Kotane Local Municipality	Memorandum of Agreement on Enterprise Development and Events Partnership
National Youth Development Agency	NYDA co-locating with Seda to support youth owned enterprises with financial and non-financial services. Participation in DDM and supporting Seda’s facilitation role
National Youth Development Agency	NYDA co-locating with Seda to support youth owned enterprises with financial and non-financial services. Participation in DDM and supporting Seda’s facilitation role
Pick n Pay	Seda to assist clients with business development services to clients referred by PnP. Pick n Pay to provide Seda with their supplier list. Monitor and track the progress and successes of the working relationships and meet once a Quarter to discuss the progress and performance of the programme.
City of Cape Town and City of Cape Town Municipality	ESD support to their emerging vendors to become approved suppliers on the municipality’s database (cost sharing enterprise and supplier development programme). Seda to provide Business Development Support to identified clients. City of Cape Town to allocate funding towards the Supplier Development Programme.
Seda/DEDAT/GRDM	Facilitation of District Development Model Roles: Joint SMME programmes in the Garden Route Region
Entrepreneurial Planning Institute (EPI) and Institute of Business Advisors of South Africa (IBASA)	Partnership in the skills development of the small business development practitioners and small enterprises in the form of a webinar series, training, and development services The Parties collaborate in: Delivering educational webinars, formal training and enterprise development services for small business development practitioners and small enterprises. Recruit and secure sponsorships and fundraising partners, from both public and private sectors, to cover the costs of delivering the activities falling under the Agreement.
Cherrie Blair Foundation and Gordon Institute of Business Science (GIBS)	The purpose of the partnership is to train 2500 women owned businesses on the Cherrie Blair Foundation’s HerVenture App, an e-learning platform for training. Seda through its network is responsible for the recruitment of the participants, assisting women owned businesses to download and utilize the HerVenture APP. GIBS is the strategic partner of Cherie Blair Foundation for Women and responsible for the implementation of HerVenture Programme in South Africa. GIBS is responsible for the training of Seda Staff on the functionality of Her Venture App and provides technical support to the participating business owners.
Merseta	In 2021, DSBD, Seda and Merseta signed Agreement for Merseta to release the discretionary grant to Seda to the value of R 50million. The funding will be provided in phased approach over a 3-year period. The purpose is to train Small Enterprise in the Automotive Trade Sector as well as facilitate Artisan Recognition of Prior Learning (ARPL).
United Nations Commission for Trade and Development (UNCDP)	To foment the entrepreneurial aptitudes and business behaviours oriented towards the growth and empowerment of entrepreneurs and promote an open entrepreneurship culture in the whole of South Africa. Seda is the implementer of the Empretec programme in South Africa. UNCTAD continues developing integrated capacity building programmes to assist national governments in their efforts to promote the creation of sustainable support structures for Small Medium Enterprises.
Enactus South Africa NPC	Purpose: To facilitate entrepreneurial community development projects driven by students and supported by business leaders. Seda’s role is to make Business Advisors available for judging, training, and professional development, provide mentorship, conduct business assessments, and provide technical support. Enactus’ role is to provide administration support in the co-ordination of joint events and projects between the two partners.
The South African Local Government Association	Purpose: To create a cooperative and collaborative framework in selected areas of capacity building and development. Seda’s role is to implement the Small-Town Regeneration programme nationally. SALGA’S role is to train LED officers, Councillors, Incubators etc.
National Skills Fund (NSF)	Seda applied to the National Skills Fund (NSF) requesting funding to benefit 14 000 beneficiaries for a total budget of R 592 275 000 for a period of 3 years. The aim of the project was to recruit unemployed graduates with Accounting and Business Management qualifications to be trained on New Venture Creation, Coaching, and Mentorship Programme to enhance their skills to provide support to Micro Enterprises. Seda will use coaching as an innovative methodology to facilitate and reinforce learning and development support to Micro Enterprises and the Unemployed graduates will be trained on new venture creation as well as business coaching to enable them to transfer skills & knowledge to Micro Enterprise owners.
University of Stellenbosch and GEM SA and University of Johannesburg	Publication of the annual GEM SA 2021/22 report and the regional/municipal Ecosystem Index (ESI) report.
Retail Motor Industry (RMI)	Purpose: To provide small enterprise development services to black informal and semi formal businesses who are candidates of the National African Association for Automobile Services Providers (NAAASP). Seda to Provision of Non-Financial and business development support. RMI to provide technical training, facilitate accreditation and facilitate access to retail automotive value chain.
Umgeni Water	This is part of Seda’s Supplier Development Programme in which Provision of Non-Financial support, training, and aftercare support to SMMEs in the supply chain of Umgeni Water in order to build their operational capabilities, efficiencies and effectiveness.
W&R Seta	Seda and W&R Seta signed an Agreement to support one thousand (1000) Tuckshops, General Dealers to the value of R 9 975 000.

sefa only enters a formal partnership with organisations that play a critical role in the SMME ecosystem – thus ensuring value add. In compliance with the Protection of Personal Information Act, sefa will not be able to divulge the names of individual partners – but it’s worth mentioning that these relationships are reported in the sefa management structures and some of them published in the annual reports.

.

Reply:

1. The aim of the National Presidential SMME and Co-operatives is to cultivate an enabling environment for the development, and nurturing of innovative ideas and best practices across the whole spectrum of small business development in the country. The awards recognise and celebrate outstanding SMMEs, SMME financiers, entrepreneur support organisations and success stories from Enterprise Supplier Development programmes.

The Department does not only recognise excellence but most importantly, the platform serves as a catalyst for business development and growth in that businesses are assessed to determine their development needs. The DSBD further seeks partnerships with other ecosystem players to provide mentorship, incubation support, training support and any relevant interventions aimed at assisting businesses to scale.

a) The department establishes incubators across all sectors of the economy to nurture and develop ideas from entrepreneurs and further provide business development support and financial support through its agencies.

Reply:

1. Given the devastating impact of the non and late payment of small enterprise suppliers by government, the Department following consultations with National Treasury and the Department of Planning, Monitoring and Evaluation (DPME) made recommendations to the Standing Committee on Appropriations and Appropriation Bill, to strengthen the enforcement of compliance to the 30-day payment obligation to ensure that all organs of state will pay invoices to small enterprises within the required timeframe of 30 days. The Department is also working with National Treasury to strengthen regulations on the reporting requirements for the late payment of supplier invoices to differentiate between small enterprise suppliers and large enterprise suppliers. This will enable the Department to specifically follow-up on the late payment of small enterprise suppliers as we do not regulatory authority as it stands.

2. We are in the process of amending the National Small Enterprise Amendment Bill that will allow for the establishment of the Ombuds Office which is going to allow for dispute resolutions including nonadherence to the 30-day payment rule.

Reply:

a) In relation to evaluation, I have been advised that the Department of Small Business Development (DSBD) periodically conducts different types of programme evaluations depending on the life cycle of an intervention/project or a programme. Just an example, in 2021/2022 financial year, the Spaza Shop Support Programme (SSSP) was subjected to a process evaluation. The purpose of the evaluation was to assess the effectiveness of the SSSP and to determine if the programme is achieving its intended objectives. The recommendations(information) derived from the evaluation were used to inform the programme review, enhance performance, and leaning. Furthermore, I have been advised that the department is finalising an impact evaluation of the Incubation Support Programme (ISP). The purpose of the impact evaluation is to determine how the beneficial impacts can be strengthened. The envisaged information/ outcomes from this evaluation will be used to inform current (review) and future policies including intervention design around small enterprise support.

b) Entities and the DSBD’s Research Units use programme performance data to identify shortcoming in programme implementation and opportunities to enhance access to finance and financial inclusion. Entities’ programmes performance data was further used as an input in the formulation of the National Integrated Small Enterprise Development (NISED) Strategic Framework. The NISED Strategic Framework outlines government’s future policy direction for the SMME and Co-operatives sector.

Reply:

The Small Enterprise Development Agency (Seda) and Small Enterprise Finance Agency (Sefa) raise awareness of their products and services particularly in rural communities through entrepreneurship awareness sessions, these are organized by the branches of the entity and in collaboration with municipalities and private sector partners.

Our agencies also use community radio stations, social media platforms, sector specific webinars, and pop-up markets to expose their products and services. Seda will now also use its access points to send out information to the nearby communities particularly in the rural areas where there is no direct presence.

During the 2022/23 year, Seda trained more than fifteen thousand one hundred and nineteen (15,119) SMMEs on various programmes and courses. These includes courses amongst many other Basic Business Skills, Business Start-Up 1, Cybercrimes, HACCP Awareness, Food Safety, QMS, SARS Incentives, Export Awareness, Costing, Empretec, Business Planning, Business Model Canvas, Community Public Private Partnership, Art of Pitching, Customer Care, Retail Management, Design Thinking, Green Economy, etc. Training are needs based and often presented in collaboration with our partners.

As part of reclaiming components of the township economy Seda has also forged key skills development partnerships namely:

• A 3-year partnership with the National Skills Fund (NSF) and W&R Seta to benefit 15 000 beneficiaries. The aim of the project is to recruit unemployed graduates with Accounting and Business Management qualifications to be trained on New Venture Creation, Coaching, and Mentorship Programme to enhance their skills to provide support to Micro Enterprises. Seda will use coaching as an innovative methodology to facilitate and reinforce learning and development support to Micro Enterprises and the unemployed graduates will be trained on new venture creation as well as business coaching to enable them to transfer skills and knowledge to Micro Enterprise owners..

In 2021, DSBD, Seda and Merseta signed an agreement for Merseta to release a discretionary grant to Seda to the value of R 50 million. The funding will be provided in phased approach over a 3-year period. The purpose is to train small enterprises in the Automotive Trade Sector as well as facilitate Artisan Recognition of Prior Learning (ARPL).

Furthermore, information is also provided through the Department of Small Business Development (DSBD), Seda and the Small Enterprise Finance Agency (sefa) websites and contact centres. The DSBD also participates in Municipal LED Forums organised by the Municipalities / Provincial and National Government in various Provinces across the country. These include Business Forums, Izimbizo, Summits / Conferences, Community Outreach Programmes, Road Shows and other programmes. The DSBD uses these platforms to share information regarding the services that are available to SMMEs and Co-operatives offered through sefa and Seda. Participants at these engagements are also directed to Seda and sefa offices that are found across the country to acquire further assistance regarding the initiatives of the Department and its agencies.